Identity crisis at airlines as losses mount

Mumbai/Bangalore: It's a race to the lowest fare for airlines as they grapple with tumbling demand, dwindling cash flows and mounting losses.
And Vijay Mallya-owned Kingfisher Airlines, which takes pride in calling itself a five star carrier, wants to be ahead of all others in this marathon.
That was conveyed by Hitesh Patel, executive vice-president of Kingfisher Airlines, in a letter to the airline's pilots some days back.
"Just as we were the number one premium carrier in happier times, we must aim to be number one LFC (low fare carrier); that is the challenge before us today. We have some innovative plans and you will hear exciting news shortly," he said in the missive.
To be the top low-fare carrier, Kingfisher will have to doggedly work towards slashing its cost of operations even as it continued to offer premium services, Patel said.
RivalsJet Airways and Air India are also increasingly flying towards the low-fare model.
Jet has launched low-fare brand Jet Konnect while Air India is wooing passengers with low fares.
Sanjay Aggarwal, CEO of SpiceJet Ltd, believes such a move was inevitable in the current market. "Full carriers have already reduced capacity in a meaningful way and are shifting a large part of whatever is remaining (capacity) to low-cost flying," he said.
Aggarwal said the recent overtures of these airlines were an admission that the market for premium travel was shrinking. "The move only shows that low cost is what the consumers want," he said.
However, low-cost players do not expect the diversion in strategy by full-service airlines to be very successful.
Aggarwal warned that shifting to low fares by full carriers would help them only if they attuned their cost structures to it. "Their aircraft utilisation has not gone up, distribution costs have not come down, so I don't know if it will help them," he said.
05/06/09 N Raghuraman, Praveena Sharma & Archana Shukla/Daily News & Analysis

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Jun 2009, Low Cost General JUn 2009