Mumbai: Less than a week into its international debut, Kingfisher Airlines Ltd has decided to cut the frequencies of some of its proposed non-stop flights to the US, as it struggles to limit potential losses from high jet fuel costs.
The full-service airline, which started international operations on 3 September with daily non-stop flights between Bangalore and London-Heathrow, will still fly non-stop to US cities when it starts on the route in November, but not daily.
“We had originally planned to start daily (non-stop) flights connecting Bangalore to San Francisco,” said a senior executive at Kingfisher Airlines. “Now we will restrict that to three or four flights a week for the time being.”
Fuel pinch: A Kingfisher Airlines’ A330 aircraft at London’s Heathrow Airport on 3 September. The company, which started international operations on the same day, says it will still fly non-stop to US cities, such as San Francisco, when it starts on the route in November—but not daily as it planned earlier.AP
The Mumbai-based airline was also considering flying to San Francisco from Bangalore with a halt at another international city, so it could combine routes and fill jet fuel in other countries where it is less expensive.
“Stopping at Dubai or Singapore will help us fill jet fuel at 30% cheaper rates compared with India. But there is no going back from the promise of offering non-stop flights to the US,” said the same executive, who didn’t want to be identified.
Jet fuel prices have increased 60% globally since January as crude oil prices rose to more than $147 (Rs6,526.8) a barrel in July, before declining recently to less than $110. Kingfisher had placed orders for five wide-body A340-500 planes, used on long-haul international routes, in early 2006, when crude oil prices were about $60 a barrel.
“Kingfisher cannot do away with non-stop flights because A340-500s are specially designed for non-stop operations, so it will be detrimental to engine life if the carrier flies one-stop,” said a Mumbai-based analyst at a domestic brokerage. He didn’t want to be named.
A long-haul international flight needs at least 18 months to become profitable, according to analyst estimates, but this is becoming tougher to achieve because of the rise in fuel prices.
Kingfisher Airlines is now selling two of the five A340-500 planes it ordered even before taking delivery from aircraft maker Airbus SAS, according to another Kingfisher executive who’s familiar with the development.
Airbus itself is brokering the deal and several airlines from Europe and Africa are interested in buying the planes, he added, but did not disclose further details.
“The dynamics of the aviation market has changed and we are re-evaluating our international plans with ATF (aviation turbine fuel) prices going through the roof,” this person said. “But that does not mean we will cut down the size of our operations. Kingfisher Airlines has secured approval to fly to 13 destinations and we will connect all these points by the end of this year.”
Apart from the five A340-500, Kingfisher had placed firm orders for five A380s, the largest civilian planes ever built, five A330s and five A350s for use on long-range international routes.
The Financial Times had on 25 August quoted Vijay Mallya, founder and chairman of Kingfisher Airlines, as saying the carrier has negotiated with Airbus to defer the deliveries of 32 A320 short-haul jets from 2008-09 to 2010-12.
The report quoted Mallya as saying that because of intense competition in the Indian aviation market, Kingfisher was scaling back its planned capacity growth and deferring some orders.
Hitesh Patel, executive vice-president of Kingfisher Airlines, said the airline wouldn’t need too many mid-size planes to operate in the Indian skies as it had acquired low-fare carrier Deccan Aviation Ltd. “We are re-evaluating our international and domestic operations with oil prices shooting up,” Patel said. “But nothing will take us behind in the international focus. We are getting tremendous response for our first international Bangalore-London flights.”