Passengers may soon have to pay for food on board low-fare service Kingfisher Red as the parent carrier, Vijay Mallya-promoted Kingfisher Airlines Ltd, studies ways to change the way it operates in a deteriorating market condition.
“In line with market dynamics, Kingfisher Airlines is evaluating various options, including charging for food on board Kingfisher Red,” said an official who spoke on condition of anonymity because he is not authorized to speak for the company. “The airline has kick-started a market research to find out what is the best option for the airline, but nothing has been finalized as of now.”
A Kingfisher spokesperson did not return calls.
In October, Kingfisher Airlines began serving free food on Kingfisher Red, comprising a bottle of water, a cup cake, freshly cut fruit and upma—a southern Indian breakfast food made of rice flour. Kingfisher Red, which is a no-frills, all-economy, low-fare service, was created by UB group-run Kingfisher Airlines by re-christening Air Deccan, India’s first low-fare carrier that it acquired in mid 2007. Earlier, Air Deccan was selling food on board, which doubled as a source of revenue.
Currently, at least 70% of Kingfisher’s flights are operated under the Kingfisher Red service. Kingfisher has at least 370 daily domestic flights, with 73 aircraft connecting 70 destinations.
With corporate traffic slowing and ticket yields coming under pressure, another full-service carrier and India’s largest carrier by passenger carried, Jet Airways (India) Ltd, has also started an all-economy, no-frills, low-fare service under the Jet Airways Konnect brand. The new service is in addition to its low-fare subsidiary, JetLite (India) Ltd, formerly Air Sahara.
At present, one-third of Jet Airways capacity is operated under Jet Airways Konnect, which will be increased to two-thirds likely by October in a bid to stay afloat. National Aviation Co. of India Ltd, which runs Air India, is also planning to start a low-fare operation on domestic routes as passengers begin to stay away from flying. Air India Express is the low-fare unit of Air India and flies only on short-haul international routes.
“The market dynamics have changed since Kingfisher Airlines decided to serve free food. Now, you are forced to review your decisions,” the Kingfisher executive said.
Domestic airlines are expected to together post a loss of $2 billion for the fiscal ended 31 March due to high jet fuel costs and falling passenger numbers.
Kingfisher Airlines posted a net loss of Rs1,608.82 crore for fiscal 2009. Its operating loss after interest and before exceptional items is Rs2,448.48 crore. The original net loss was reduced by adjusting provision of maintenance rent that was reversed at Rs530.82 crore for the reporting period.
“It is a sensible move by Kingfisher Airlines because though the customer is not paying extra for having refreshments on board, the airline continues to incur cost,” said an airline expert who did not want to be identified. “Though the cost for food is nominal, it will be prudent to cut all possible revenue leakages. The airline will get additional revenue if it is selling food on board like other airlines, including Jet Airways.”
In its bid to cut costs, Kingfisher Airlines in July decided to suspend its Bangalore-London route effective 15 September. It also stopped its feeder service from Bangalore to Colombo.
“An airline cannot carry on with the kind of losses what Bangalore-London was making,” another Kingfisher Airlines executive said. “With a Delhi-London route in the anvil, we will be able to save the London slot, which is very expensive.” He also declined to be named.
At the same time, though, the firm is going ahead with its international plans. Beginning September, Kingfisher plans to start two new routes from Mumbai connecting Hong Kong and Singapore. It is also planning to start flights to Bangkok, Dubai and Colombo from Mumbai.
The carrier has applied to the ministry of civil aviation to commence operations on the New Delhi-London sector. It also has plans to start operations to Bangkok and Dubai from New Delhi.
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