Gaurav's Blog

Kingfisher Airlines- A clean sheet approach

 

 

Much has been said and written about Kingfisher Airlines in the recent press articles. No doubt that Kingfisher squandered, in fact spectacularly squandered a perfect opportunity to become India's premier airline, it is not the intention of this article to add to the already ubiquitous post-mortems of the company. Instead the approach is to see if Kingfisher were to play a second innings, a sort of re-birth, a resurrection with a clean sheet, what would be the opportunities. In a sense, this article starts off, where the previous article on Bangalore Airport ended.

Let us go back to mid-2005, when Kingfisher launched its operations. The original intention of the company was to base its operations at Bangalore, the Holding company- UB groups' Headquarters. This could not be accomplished as HAL was absolutely full with no parking bays to spare and little incentive to entertain more requests for civil operations. The new Bangalore Airport mired in controversy and with its scheduled opening then 3 years away in April 2008, Kingfisher decided to move its Airline head office to Mumbai. However, it continued to nourish ambitions of flying International routes out of Bangalore, including its bizarre, flashy plan to connect India's silicon valley to America's which meant starting a 19 plus hour flight between Bangalore to San Francisco route. A model replica of the aircraft was even erected at the entrance to the Bangalore's new Airport in 2008. There was just one small problem- A340-500 bought for the job, 5 of them infact, could not have accomplished this without payload restrictions, multiple flight deck crews, filing special DGCA exemption for the ULR status of the flight and several other problematic issues. Technically, the aircraft has an endurance that extends well beyond 20 hours, but any commercially oriented airline inherently knows that flying that long most definitely is beyond the profitable range of a commercial flight, as far too many cheaper options are available. Kingfisher only had to look at the experience of Singapore Airline and Emirates with the A340-500 (publicly available information) but the decision was made.

But I digress from the main point. Let us assume if Kingfisher was start again today, with a clean sheet, no wide body aircraft on order other than the A330-200's already in possession. Would starting off at Bangalore be a good idea? Statistics seem to suggest so. Kingfisher continued to be the largest domestic carrier out of Bangalore (beating Jet & Jetlite combined), just before the major downsizing of last 2 months. More Kingfisher ATR's were deployed at Bangalore than at any other station in the country, until Bangalore Airport failed to provide more capacity and parking bays forcing Kingfisher to deploy aircraft elsewhere. Bangalore provided and continues to provide a perfect opportunity to build an ATR based hub with opportunities to tap into the major North-South traffic flows and secondary South to West and South to East flows. With an ATR's effective range of about 300 nm, almost all South Indian cities in the states of Tamil Nadu, Kerala Karnataka and parts of Andhra Pradesh are within the payload-range an ATR had to offer. What is more, many of these routes were dense enough to be self sufficient by themselves and even allowed use of larger aircraft. This however, proved to be counter-productive, as the airline planners never felt the need to build a hub structure, or were discouraged by the availability of capacity and slots. In addition, many Airline planners tend to get too taken by utilization statistics of the aircraft, instead of looking at profitable utilization. Whatever the constraints may have been, the fact is that lack of effort in building a structured hub bank flight schedule led to a situation where slowly as lower cost competition emerged willing to aggressively flood the market with capacity (such as Indigo), stand alone routes were no more profitable. Kingfisher could have concentrated on building a hub structure at Bangalore instead of being over-ambitious in trying to conquer all markets, including the international ones. It failed to realize that there are ATR markets that are naturally protected as their Airports could not take the code C aircraft LCC's like Indigo were operating.

I believe this can still be done (ignoring of course the mess that is the accumulated debts and fleet on order etc. As I said, following a clean sheet approach). Kingfisher has to bring clarity to its thought process- a better product it has enjoyed right from the beginning. If it could rebuild its network, offering an advantage over its competitors through a true Hub network structure and its alliance membership, it can sustain itself profitably. It also has to learn to pick & chose opportunities and let others be sacrificed to compete selectively rather than be everywhere. Just like Spice jet has used the Q400's out of Hyderabad (with typically twice the range of ATR's) to connect major South and Central Indian cities, Kingfisher could replicate it with its own ATR hub out of Bangalore with 2-3 distinct advantages- denser routes ,better fuel efficiency and shorter distances.    

On the international side too, as the market grows, Kingfisher could use its A332 to operate flights to London (& Hong Kong) as it did before. (More so now, with BA's feed available. BA too, could use a second bank evening departure out of Bangalore). You may notice that multiple European carriers including the smaller ones like KL, Swiss, Austrian and Finnair (other than the 3 large ones- LH, BA and AF-KL) fly to Mumbai and Delhi. However, carriers such as Finnair (and even JL) could easily consider Bangalore in future if there was a large enough feed available from a local partner such as Kingfisher collecting and disseminating traffic from all over South India. Currently, Kingfisher does provide this feed to Finnair out of Delhi. As an example, Nokia runs the largest cell phone manufacturing plant at Chennai that generates demand for travel and cargo. Similarly, Toyota's plant at Bangalore has continued to grow. Similarly, many seasoned travelers would seek to avoid the mega hubs of Frankfurt or Paris, preferring to transfer through quieter, more efficient Europeans transfer hubs such as Finnair's Helsinki hub.    

There are other big advantages for Kingfisher in operating out of Bangalore- Young MBA analysts are taught to do PEST Analysis and from that point of view, there is no other place than the state of Karnataka, where Dr. Mallya has greater political clout. Infact, he is an independent Member of Parliament from Karnataka. Therefore, politically for UB, no city even comes close to Bangalore. Economically, no market has beaten Bangalore for the last 5-8 years with over 40% growth in traffic recorded in multiple years. That Bangalore is UB's headquarter means complete synchronization between the administrative functioning of UB and its fully owned subsidiary Kingfisher (which is mostly amiss) and  convenience and coordination of office space (Kingfisher is currently talking of selling its high cost Mumbai office real estate).

Too late now – A good opportunity is lost. Forever.