Chairman and CEO of Kingfisher Airlines, Vijay Mallya, has stated he believes the Indian airline industry is preparing to head in a new direction.Airlines previously decided that low fares would be the way to catalyse traffic growth; and it worked, as the figures show. But how much of the growth was due to a demand for connectivity and air travel and how much was of it was stimulated by unsustainably low fares?” he asked. “The days of discounting and cut-price ticketing are over. Airfares are going to reflect the actual costs of operation. All of them.”
Dr Mallya does not believe that the change in pricing strategy - which will signally be unveiled at ultra-low-cost Air Deccan, of which Kingfisher parent United Breweries recently took at 26% stake - will prove a deterrent to traffic levels. “India is not a ‘cheap and cheerful’ consuming society,” he stated. “A good degree of Indians want nothing but the best.”
He further said that the LCC’s pricing would not require whole-scale revisions to become viable. “Deccan needs only INR500 (USD12.35) more to be profitable, and that is not enough to scare most people off the airplane. Once you indulge in air travel, you will not get back onto the train for a 14-hour journey,” he said.
Dr Mallya, who thanked the Centre for its leadership in the Indian aviation sector, expressed his confidence that Kingfisher would be allowed to serve international markets ahead of the official five-year wait period. Once endowed with such rights, he plans to make non-stop service to the US the cornerstone of his overseas network.
“We’ll serve London too, but our international model is US-to-India-centric,” he said, explaining that he had purchased ultra-long-range aircraft to avoid the necessity of a technical stop in Europe. The carrier’s first A340-500 will be delivered in Feb-08 and will be used to serve Bangalore-San Francisco, with the next route Bangalore-New York.
Consistent with its aggressive network build-up on the domestic market, Kingfisher will not go cautiously into the international arena. It is scheduled to receive 10 widebodied aircraft between Feb-08 and Aug-08.