Rivals including SpiceJet and Indigo to gain from Kingfisher Airlines' exit from low-cost operations

Kingfisher Airlines' decision to terminate its low-cost carrier operations is aimed at increasing its attention on the full-services model, which has relatively lesser competition. However, the move seems unviable since it will not only impact Kingfisher's market share and financial performance in the coming quarters but also increase prominence of low-cost rivals including Spice-Jet and Indigo in the domestic aviation industry.
After taking over Deccan Air's low cost-carrier operations in late 2007, Kingfisher has struggled hard to keep pace with other low-cost operators. This might have prompted Kingfisher to exit the segment. The decision, however, is likely to cause more harm than good given price-conscious Indian travellers.
The data from Directorate General of Civil Aviation (DGCA) shows that more passengers have chosen to fly by low-cost carriers over the past two years. In 2009, low-cost carriers accounted for 39% of total airline passenger traffic. The share bulged to 50% in the seven months to July 2011. Against this backdrop, an exit from the basic carrier model means that Kingfisher will find it difficult to outgrow its rivals in terms of passenger base, impacting its revenue and profits.
29/09/11 Rajesh Naidu & Ranjit Shinde/Economic Times

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Categories: Indigo Airlines Sep 2011, Kingfisher Red Sep 2011, Kingfisher Sep 2011, spicejet Sep 2011