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Kingfisher readies mega overseas plan

Kingfisher readies mega overseas plan
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First Published: Fri, Nov 02 2007. 11 56 PM IST

Updated: Fri, Nov 02 2007. 11 56 PM IST
Kingfisher Airlines Ltd, together with its low-fare airline affiliate Deccan, wants to fly direct flights to two dozen destinations outside India as part of an ambitious launch of international operations that are scheduled for early next year.
Deccan, the airline that Kingfisher is likely to use to fly overseas, has sought government permission to fly to the US, the UK, Germany, Canada, Switzerland, South Africa, China, Australia, Thailand, Malaysia, Nepal, Sri Lanka as well as some countries in West Asia.
“That’s our wish list. You ha-ve to apply... What the government (permits), who knows?” said Kingfisher Airline’s executive vice-president Hitesh Patel. “The highest yields are on the Gulf routes; the bread and butter is there. The US, too, is equally good, our business plan (there) is to have non-stops and that’s the future.”
State-run National Aviation Co. of India Ltd’s Air India flies to 40 international cities from India and Jet Airways (India) Ltd flies to about 10.
Kingfisher’s Spreading Wings (Graphic)
Flight Plan (Graphic)
In September, JetLite (India) Ltd, formerly Air Sahara and now controlled by Jet, sought approvals for daily flights between Chennai and Colombo as also New Delhi and Kathmandu, besides permission to fly to Dubai, Oman, Qatar, Kuwait, Bahrain and Saudi Arabia.
Both Kingfisher Airlines and Deccan are not eligible to fly international routes yet. Current civil aviation rules do not allow an airline with less than five years’ domestic operations to fly overseas and a proposal to dilute that rule is still pending with a group of ministers who are scheduled to meet later this month. The plan to remove the five-year rule has been opposed by at least two members of the group, according to people familiar with the deliberations.
“By December, the new policy is supposed to be there, if for some reason it doesn’t happen, we can piggyback on Deccan and move forward,” Patel said. This is because, by early-2008, Deccan will have five years’ operating experience by Kingfisher’s interpretation. Deccan received its licence in January 2003, ahead of the launch of operations in August that year.
Deccan’s owner, Deccan Aviation Ltd, is now controlled by Kingfisher Airlines’ parent, the UB Group. But for Kingfisher to be able to fly abroad with Deccan, UB will need to increase its ownership in the low-cost carrier to at least 51%, a top civil aviation ministry official said last month, asking that he not be identified.
The Bangalore-based brewer, which shored up its 26% stake in Deccan to 46% recently, has said it intends to increase its equity to 51%.
Kingfisher and Deccan together account for a 30% share in domestic air passenger traffic. The two airlines together have a fleet of more than 80 planes currently, one of the largest domestic air fleets in India, competing with the 90-strong fleet at Jet Airways and Air India’s 110 aircraft.
In 2008, Kingfisher will add 10 long-haul planes, including two Airbus SAS-made A340s, intended for non-stop flights to the US. The first international flight is planned to start between Bangalore and San Francisco by April, followed by Bangalore-New York in June-July. This is likely to be followed by flights between Mumbai, New Delhi and London using the A330s that fly in next from the Toulouse, France-based manufacturer Airbus SAS.
Kingfisher’s Patel said Deccan is likely to use its fleet of A320 aircraft (that can fly about four hours) to fly to the Gulf region, but did not elaborate on how the overall international route network will be split up between his airline and Deccan. Kingfisher plans to use the new airport at Bangalore as its international hub.
“A major chunk of the Indian community is in the Bay Area, which will drive significant business and leisure passenger traffic in the coming months,” said Mark Martin, an analyst with consulting firm KPMG International’s New Delhi offices. “Many of these passengers today fly to the nearest hub Los Angeles or Tokyo and Singapore, and then to a hub in India and then onward to Bangalore. You much rather fly direct.”
Air India, which is adding 68 long-haul aircraft by 2011, partly to replace its existing fleet, has already announced plans to connect San Francisco with Bangalore directly by April-May next year after another non-stop flight planned in February between New Delhi and New York. Air India spokesperson Jitender Bhargava said the airline will continue to increase its international network of 40 destinations as it gets more planes.
Kingfisher’s competition on international routes will, however, be more with foreign carriers as they have a greater market share than Indian operators. Germany’s Deutsche Lufthansa AG, for instance, carries more than 20% of India’s international traffic, even though it has fewer daily flights than Air India. Singapore Airlines Ltd comes in second.
(Mehul Srivastava contributed to this story.)
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First Published: Fri, Nov 02 2007. 11 56 PM IST