Kingfisher Red to exit budget airline business
India’s Kingfisher Airlines plans to pilot a new premium business model and ground its existing low-costoutfit.
The airline, India’s second biggest private carrier, is run by drinks baron Vijay Mallya, who said changes would come in the next four months.
The budget arm of the airline, which was created in 2008, is called Kingfisher Red.
Rising losses and cut-throat competition have forced Kingfisher Airlines to dump the low-fare business model and focus instead on catering to the premium, business-class passengers across the country.
After struggling for over three years to turn around the low-fare airline business, which it bought from Captain Gopinath in 2007, the Vijay Mallya-led firm has decided to ground Kingfisher Red.
“We are doing away with Kingfisher Red, we do not want to compete in the low-cost segmenta¦.We cannot continue to fly and make losses, but we have to be judicious to give choice to our customers,” Vijay Mallya said after the annual general meeting of the airline in Bangalore on Wednesday.
The unexpected move runs contrary to current industry practice where other major airlines are either full-fledged low-fare carriers, or like Jet trying to increase the share of low-fare passenger revenue. Recently, Jet announced plans to push its existing low-fare capacity from 72% to 85-95% in the next five years.
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