‘Kingfisher Airlines is targeting 1,000% growth in Year One’

To tap India’s potentially large market for air travel (which is expected to grow at about 25-30 per cent over the next five years in the wake of liberalised FDI norms for domestic air transport services), Dr. Vijay Mallya’s UB Group has invested Rs 1.6 billion in Kingfisher Airlines (KA). There are plans to have an initial public offering (IPO) in the next year or two. Preeti Jadhav caught up with Alex Wilcox (President and COO, KA) and Girish Shah (Marketing Head, KA) and got their views on the differentiated positioning, plans and the open sky policy. Excerpts…

What’s the rationale for launching an airline — a highly capital intensive business?

Shah: It’s a sunrise sector and the changes in the civil aviation policy present a terrific opportunity. It’s an ideal sector to have a presence; especially with the increase in FDI and an overall thrust on investment. In this boom time scenario, domestic travel has grown by 27 per cent and we expect this growth to continue.

What sort of branding and positioning will Kingfisher Airlines adopt?

Wilcox: Our airlines will be second to none in India. We shall incorporate changes on a regular basis so that the frequent flyer will not get bored. Our ‘passengers’ will be called ‘guests’. They will be treated uniquely and on par — the single class will be referred to as the ‘Kingfisher class’.

Shah: Kingfisher Airlines will aspire to provide a safe value based and an enjoyable travel experience. We are not in the business of delivering a tangible product; so, the values imbi-bed by the service organisation are those that the brand eventually internalises. No other carrier in India, except for Kingfisher Airlines, can boast of all brand new aircrafts or spanking new ones. We will be the first airline with in-flight entertainment system. We have the youngest fleet in the country, which automatically translates into being the safest fleet.

Are the fares really 25 per cent cheaper?

Wilcox: There is a lot of pricing pressure in the market due to several new other players. But with lower prices, you still need more traffic to make more money. It’s a cut-throat business out there.

Shah: Our pricing is value based — so we shall provide value additions to the current level of service expectation. The overall concept is inspired by the ‘airlines of the west’ like JetBlue or Song, etc. Our structure will differ and will be on an evolutionary curve.

What are the targets in terms of market share and capacity growth?

Wilcox: We are essentially looking at a 1,000 per cent growth in first year since the base will be smaller. By February 2006, we shall have 10-12 planes running.

Shah: Excellent yields and a great load factor is what we are looking for. So if we cross a load factor of 70 per cent, our objective will be met. Market share is the semantics of the game — dependent on the actual number of aircraft someone brings in. A hundred aircrafts automatically lead to a higher market share. We are looking at all brand new 30 aircrafts in our fleet within the next three to five years.