Financial crisis: Kingfisher plans low-cost routes

UB Group-controlled Kingfisher Airlines is planning to convert some of its aircraft being used in the short-haul domestic sectors into all-economy configuration.

Of the 66 aircraft in the airline's fleet, 30 are short-haul - three Airbus 319, 19 Airbus 320 and eight Airbus 321.

We are planning to change some of our aircraft being used in some of the short-haul domestic routes, with less demand for business class, to single configuration.

The decision was taken after it was found that the single configuration Kingfisher Red fleet was giving more revenue," said a Kingfisher executive requesting anonymity.

Kingfisher Red is the new name given to the Air Deccan fleet and operates as the low-cost arm of Kingfisher Airlines.

The latter bought the fleet from G R Gopinath in 2007 June. To boost revenues during the slowdown, Jet Airways had launched low-cost wing called Jet Konnect along with its subsidiary JetLite, renamed after the acquisition of Air Sahara.

The executive said the airline was in deep financial crisis, but had not decided on any fixed number of aircraft to be changed.

"Our business class seats are more spacious than other airline in the country. Due to which we have less number of seats and that impacts the revenue, as not all the routes have demand for business class seats," he said.

The airline spokesperson did not respond to email and text messages. Kingfisher Airlines is the only listed carrier to have not turned profitable.

It ended the 2010-11 financial year with a loss of Rs 1,027 crore (Rs 10.27 billion).

Hindustan Petroleum Corporation Ltd, recently stopped fuel supply to the airline for a few hours after the dues had touched Rs 650 crore (Rs 6.5 billion), of which Rs 170 crore (Rs 1.7 billion) was not covered by guarantees.

The airline was also recently threatened by GMR, which operates Delhi and Hyderabad airports, that it will be put on a cash and carry system after the airline's dues touched Rs 90 crore (Rs 68 crore for Delhi and Rs 22 crore for Hyderabad).

Kingfisher Airlines also restructured its debt after approval from banks. The airline restructured over Rs 7,000 crore (Rs 70 billion) of its debt.

The package included conversion of about 30 per cent debt by banks into capital and a loan of Rs 735 crore (Rs 7.35 billion) from parent company UB Holdings into equity.

FLY
Aircraft make	Maximum seats	Kingfisher Aircraft	% capacity increase
Airbus 320	180 (1 class)	134	34
Airbus 321	199 (1 class)	151	31