UB Group, which owns Kingfisher Airlines Ltd as well as a controlling stake in Deccan Aviation Ltd — the two companies are in the process of being merged — could soon replace most peak-hour flights of Deccan on metro routes with those of Kingfisher in an effort to rationalize routes and increase overall profitability of the merged entity.
Changing strategy: A Kingfisher Airlines flight awaits clearance to take off from the Mumbai airport. Kingfisher is targeting business travellers on metro routes who are willing to pay more.
“We have filed a new flight route programme with regulator Directorate General of Civil Aviation,” said a senior Kingfisher Airlines executive, who did not want to be identified.
As part of the route rationalization, Deccan, which runs India’s largest low-fare carrier Simplifly Deccan, will operate mostly non-peak-hour and late-night flights on metro routes, catering to price-sensitive customers, including leisure travellers, even as Kingfisher seeks to tap business travellers willing to pay more.
“Subject to approvals, the proposed flight route plan will be effective from (the) summer schedule, starting from March 28,” the Kingfisher executive said. He declined to divulge the schedule details but said this is the best possible way to reap the benefits of the acquisition.
Aniket Mhatre, an analyst with Mumbai-based broking firm Prabhudas Liladher Pvt. Ltd, thinks so too. According to him, rationalization of this kind could help both airlines increase yields. “The business travellers will not mind paying more for a product like Kingfisher. This will positively impact the profitability of the airline,” Mhatre said.
Another Mumbai-based full- service airline, Jet Airways India Ltd, which acquired Sahara Airlines Ltd and turned it into a part full-service, part low-fare carrier JetLite, also rationalizing summer schedules.
“We are designing our summer schedule in such a way that a Jet Airways flight is not clashing with a JetLite flight. For instance, if there is only five minutes difference for flights of Jet and JetLite starting from Mumbai to Delhi, we will widen the gap or connect other metros from the same slot,” said a Jet Airways executive who did not wish to be identified. The executive added that there are no plans to stop JetLite from flying metro routes because there is a growing demand for non-premium fares on such routes.
“Leading financial institutions have also started looking for lowest available fares for travelling in the peak hours. Therefore, there is a market for services other than premium services. Moreover, an airline cannot withdraw all flights from metros since an aircraft will have to fly at least 12 hours for better asset utilization rate,” said an aviation analyst with international brokerage, who did not wish to be identified.
The Kingfisher Airlines executive said Deccan would continue to operate peak-hour flights on metro routes where demand for low-fare tickets remains high.
“Under this concept, the routes are divided into two in terms of focused business travellers and price-sensitive leisure travellers. Kingfisher Airlines may operate more flights in sectors where there are more business travellers, contributing towards profitability of the airline,” he added.
“We have consistently focused on increasing connectivity between the major metros and the fast developing mini metros across India,” said Ramki Sundaram, officiating CEO of Deccan Aviation.
For instance, from 30 March, Deccan will commence operations to Indore, Visakhapatnam and Lucknow from Mumbai.