In what gives out a clear signal that the turbulence being faced by the global aviation industry is spreading its wings in India, Vijay Mallya-promoted Kingfisher Airlines has announced that the airline will return up to ten aircraft in the next twelve months in a bid to reduce over-capacity in its operations.
Aviation analysts and operators agree that one of the main reasons for the downturn in the Indian aviation sector is due to overcapacity that the carriers have put into the market.
Among the returned aircraft of Kingfisher are five Airbus A 340s, which were acquired two years back by Mallya for his carrier?s international operations.
With this return, analysts agree that Kingfisher?s international operations have essentially put on hold indefinitely. ?It is quite a dampener, especially in Mallya?s case. He tried very hard to beat the 5-year international norm which was not allowing him to fly abroad. If he had not acquired Deccan Aviation then he was planning to start an airline abroad and get it to fly into the country. If that had not worked then he would up the ante and find another way to get his airline to fly abroad,? a Kingfisher official said on the condition of anonymity. ?And now that he can fly abroad, the high cost and losses are not allowing him to do so,? he added. planning to get rid of around eight aircraft.
Kingfisher has already sold two of its five wide-bodied Airbus A340s to Nigeria?s Arik Air and has deferred deliveries of 32 narrow-bodied A320 aircraft. The carrier further returned three A 340s earlier this month as well.
In the current Kingfisher fleet, 2 ATRs (70-seater turbo prop aircraft) and three of the recently delivered wide-bodied Airbus A330s are lying unused following a route rationalisation exercise.
On Thursday, Kingfisher released results for the nine-month period rather than the full twelve months to 31 March as Deccan previously followed a July-June financial year and this has now been changed.
In a Bombay Stock Exchange filing, the airline saw pre-tax losses widen to Rs 707 crore ($147 million) during the period from Rs 244 crore in the same nine months of the previous year.
Net losses were reduced to Rs188 crore ($39 million) from Rs 246 crore due to tax credits. Revenue from operations increased to Rs 1,440 crore from Rs 1270 crore but total revenue fell to Rs 1,540 crore from Rs 1620 crore as it booked much smaller profits during the period from the sale of aircraft purchase rights, Kingfisher said in a statement.
Kingfisher became a publicly traded company earlier this year when it acquired the former Deccan, which was already publicly traded. Kingfisher?s assets were injected into the listed entity and the Deccan trading name is no longer used.
All of India?s airlines have been operating in the red as a result of increased costs and overcapacity in the market following years of aggressive growth. Market conditions have deteriorated further since the end of March, which Kingfisher now uses for the end of its financial year.