oneworld Catches Kingfisher

Since being awarded its aircraft operating certificate (AOC) in 2005, Kingfisher has grown dramatically, but this has largely been confined to the Indian domestic market, with the carrier only serving 7 international destinations.

Kingfisher has, however, played a role in fundamentally changing the landscape of the Indian market by helping to grow the size of the market substantially, along with the new low-fare carriers such as SpiceJet and Indigo.

In 2004, Air India, Indian Airlines and Jet Airways were the frontrunners in the Indian market. Its size translated to approximately 800,000 weekly scheduled seats (domestic and international). Since then there has been a near doubling of the market with over 1.5 million seats on offer. (source: Flightbase). In 2005, all of Kingfisher’s operations were domestic and the carrier only operated bases from two airports: Mumbai and Bangalore.

The table below illustrates its position among the leading 10 carriers in 2005 (based on weekly seat capacity) in the Indian market. A market where Indian Airlines and Air India held 43% of the scheduled seat capacity.

Source: Flightbase June 1-7, 2005

Its subsequent rapid growth can be seen in the following table, which summarises the carrier’s current position in the Indian market. As the data highlights, it now operates to over 71 scheduled destinations and has a market share of scheuled capacity of 14%. Over this period, Air India and Indian Airlines have consolidated their networks and have only 17% of scheduled seats, meanwhile there has also been a growth in capacity from the low-fare carriers such as SpiceJet and Indigo.

Source: Flightbase June 1st-7th 2010

Indigo and SpiceJet still operate wholly domestic networks, however SpiceJet has done so for almost five years (a prerequisite to gaining international traffic rights in India). Therefore, it is possible that SpiceJet could look to expand its B737 network to serve international markets soon.

Kingfisher effectively overcame this moratorium on international flying by merging with an airline with an existing AOC (Air Deccan), which had operated domestically for over five years, allowing Kingfisher to start serving international markets from 2008.

However, Kingfisher’s international expansion has not been as rapid as expected. It decided to lease out three A340-500s to Arik Air last March rather than further its international ambitions, perhaps the clearest signal of financial troubles. This has also had the effect of pushing back its plans to serve New York (where the carrier has a sales office).

The International Network

Kingfisher’s international markets are summarised below. (Note: this does not take into account the latest route additions from Delhi to Hong Kong and London Heathrow.)

Kingfisher’s announcement of new daily services from Delhi to London Heathrow (from March 28) and Hong Kong (from April 7) could indicate that it is looking to grow its network away from the fiercely competitive Indian market.

Alliance Battle for India

Kingfisher’s partnership with Jet Airways has run into trouble. The two carriers had signed an agreement covering codeshares on domestic and international flights, as well as interline agreements. However India’s competition commission raised a number of questions relating to the potentially ‘uncompetitive’ partnership and talks appear to have broken down.

Perhaps more significantly, Kingfisher this week announced that it plans to join the oneworld alliance and with a fleet of over 66 aircraft and more than 70 destinations in its network, Kingfisher is a good catch for oneworld. British Airways has long tried to develop a strong partner in India - one the largest long-haul markets from the UK but had failed to pull Air India or Jet Airways into its global network.

Overall, Kingfisher’s integration into oneworld and its launching of new routes points to a revitalised carrier, with a clearer aim of what it hopes to achieve, unlike the confusing signals last year through announcing international routes but not delivering them.

Where to next?

Kingfisher is likely to join its existing international markets to all their Indian bases, as well as open new services to Asian hubs, such as Kuala Lumpur. Routes News has studied the IATA BSP data to gain an insight into where it might fly to next from India.

Top 5 Non-Served Indirect markets from Delhi. (Passenger numbers two-way traffic)

Source: IATA BSP DATA (NOV 08-09)

Top 5 Non-Served Indirect markets for Mumbai. (Passengers numbers two-way traffic)

Source: IATA BSP DATA (Nov 08-09)

As the tables highlight, it is not surprising that the largest markets centre around the Indian communities in cities such as Manchester in the UK, Sydney and Melbourne in Australia and Vancouver and Toronto in Canada.

And, with an existing presence in the UK, additional capacity would appear to be a logical next step for Kingfisher.

As the Indian economy continues to grow and the propensity of the population to fly increases, Kingfisher will be well placed to take advantage. Firstly by growing its domestic network and then looking to expand its international network to markets with high VFR traffic and growing business links.