New Delhi: The UB Group-owned Kingfisher Airlines Ltd has run into another roadblock in its ambitious plan to fly to international destinations with a necessary relaxation in government policy still pending approval even as the airline targets an August launch of its first non-stop flight between Bangalore and San Francisco.
In September, Deccan Aviation Ltd, in which UB has a controlling stake, had sought an “in-principle” approval from the government for permission to fly to as many as two dozen cities worldwide, anticipating a relaxation of eligibility criteria by December to fly overseas. Indian rules mandate at least five years of domestic flying experience before being able to start international operations.
No take-offyet: Passengers board a Kingfisher aircraft at the Bangalore airport. The airline has an August launch target of its first non-stop flight between Bangalore and San Francisco. (Photo: Hemant Mishra/Mint)
The expected relaxation to allow start-up carriers to fly abroad under the new civil aviation policy wasn’t granted in time after opposition by some members of a decisive group of ministers against revoking norms, according to senior government officials. The policy is still under consideration by the government but it is widely expected that the key relaxation will not go through.
Given that uncertainty, the next best option for the carrier was to fly on the rights of Deccan, which completes five years of operations in August. The UB Group will by April have a 69% stake in the merged Kingfisher-Deccan entity.
But the civil aviation ministry has said it still cannot grant the “in-principle approval” before the legal merger of the two entities is completed and the documents are submitted with regards to the ownership structure, according to a senior government official, who declined to be identified.
In the past, National Aviation Co. of India Ltd-run Air India and Jet Airways (India) Ltd have sought international permissions sector by sector, such as Mumbai-Muscat or New Delhi-Shanghai.
The legal approvals—mergers of public companies require high court permission—will be in by April, Kingfisher and Deccan said last month while announcing details of the amalgamation. But, in the past, such permissions have been delayed.
Hitesh Patel, Kingfisher’s executive vice-president, confirmed that the government had asked his firm for further details. “We would not get (approvals) until such time as a legal merger is complete,” he said. The legalities are likely to take over a month and while the airline is targeting 31 March, that deadline, Patel said, may get pushed by “days and weeks” given procedural requirements.
Together with Deccan, Kingfisher is the second largest airline group in the country by number of passengers flown last calendar year with a 29.3% market share, just behind Jet Airways’ 29.9%. Deccan has indicated it wants 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 as reported by Mint in November.
Kingfisher’s long-haul aircraft, Airbus A340, is expected to join domestic fleet by April and, given the delays in regulatory approvals, the airline may lease the aircraft for the time until it receives approvals and finalizes other details.
Rajesh Verma, an executive vice-president at the airline, is spending most of the first half of March readying infrastructure, slots, and catering services at London’s Heathrow, New York’s John F. Kennedy and San Francisco airports as also put in place other “variables” including foreign crew members for international routes. “The earlier we open the bookings the better chance for people to buy (tickets),” he said.
Ideally, said Ashwin Damera, chief executive of Indian online travel portal Travelguru.com, the airline should open up bookings three to four months in advance if it plans to woo international travel customers who typically book in advance unlike while purchasing domestic tickets. Besides, an August launch is not ideal since that month marks the end of peak summer international travel from India.