Kingfisher Airlines puts new international flights on hold; returns planes to lessors, defers deliveries from Airbus

Mumbai: Around a month since initiating its international service, Kingfisher Airlines has put on hold its international expansion plans, including a Mumbai-London flight planned for later this month.

Dr Vijay Mallya, chairman of UB Group which owns Kingfisher Airlines, was quoted in the media as saying that the airline's international operations were under review in the face of the global slowdown, and consequently new international routes were also under reevaluation.

Kingfisher Airlines is also reported to have sold three of five Airbus A340 aircraft it had acquired for international operations. Reports suggest that these three planes have been sold to Nigeria's Arik Air.

Kingfisher Airlines had launched its maiden international service as a daily flight between Bangalore and London on 3 September. It had also received approvals to fly to the United States, other destinations in the UK, and to relatively shorter destinations such as Singapore, UAE, Saudi Arabia, Kuwait, Sri Lanka, Bangladesh, Malaysia, Thailand, Maldives, Pakistan and Hong Kong.

Rationalised international operations seem to be the current norm in the industry. Kingfisher Airline's rival Jet Airways, which has been flying international for a number of years now, announced that it would be withdrawing its Mumbai – Shanghai – San Francisco service starting January, and would instead service passengers flying to San Francisco through its partner United Airlines via the European route.

Analysts predict that airlines would restart international operations as per their original plan once the economic downturn has been weathered.

Competition from other foreign carriers has also intensified as they move in to usurp capacity vacated by the trimmed international operations of Indian carriers, at fares that are sharply competitive. British Airways recently announced a base fare of Rs9,990 (excluding taxes) to London from India.

The challenges faced in the domestic and international sectors has also forced Kingfisher Airlines to revise its initial break-even target. Chairman Mallya was quoted as saying that oil prices in the current range of $85-90 (Rs4,139-4,383) per barrel will now allow his airline to break even sometime in the financial year 2010.

Mallya was also quoted as saying that Kingfisher Airlines had served notice to its lessors of aircraft that it would be returning another four aircraft back in the face of capacity rationalisation in the domestic sector.

The airline has apparently withdrawn two Airbus A320 planes in the domestic operations already, and another two would be returned to lessors shortly. Further, it has deferred accepting deliveries of another 32 aircraft from Airbus SAS. Mallya told the media that the eight planes taken off operations were earlier owned by Deccan Aviation, and that this capacity reduction was in line with Kingfisher's original business plan.