The Hindu Business Line : Kingfisher Air not worried about competition, says Mallya

THE Kingfisher Airlines Chairman, Mr Vijay Mallya, said the young airline is not worried about competition from new domestic airlines or about getting scorched in an ensuing price war.

Speaking to the media after the AGM of UB Ltd, Mr Mallya admitted that there would be a price war due to increasing number of airlines on the one hand and the increasing jet fuel prices on the other. But the `war' would be at the lowest end of the market.

Kingfisher was positioned differently and its target was the emerging market of 100 million high-spending young consumers. "Sure there will be a bloodbath ... in so-called low-cost airlines who seek to convert the railway passenger into airline passenger. We are positioned extremely differently," he said, adding, "We are not worried about competition, it is part of daily life and we don't have it easy in the other businesses either."

Kingfisher had factored in "some element of increased cost beyond budget and so we are comfortable" with the load structures and revenue yields on an average and the target passengers. Kingfisher's focus would be on continuing to raise the bar in flight experience.

Jet fuel prices were affecting the revenues of all airlines and it was up to the Centre and the State Governments to keep the tax on aviation turbine fuel at a reasonably low level to enable new airlines to survive and grow. The industry had been fighting the issue in vain. "I don't think it will be in the interest of the Government of India to find many airlines collapsing under the weight of low fares on the one side and high fuel prices on the other side, part of which is taxation," he said.

IPO months away: Mr Mallya confirmed that the airline would go public in the next three to six months. The money would be used to finance the planned acquisition of larger jets in the coming years. The airline signed aircraft purchase deals worth over Rs 8,000 crore with Airbus late last year and the deliveries have been spread out till 2012.

The carrier started operations in May this year. "I have said we would take the company public in the next three to six months. It all depends on the right valuation. And UB will never sell cheap," Mr Mallya said. "(Many) people are extremely excited and keen to invest in Kingfisher Airlines — which for the moment is being kept as a 100 per cent subsidiary of UB Holdings," he added.

Kingfisher has so far acquired 10 of the 30 originally intended Airbus aircraft and is considering adding some more. "We have ten firm and 20 options and now we have to think hard about converting some of those options into firm orders," Mr Mallya said. The orders with Airbus include the A330s which are due for delivery in 2007; and the A380 super jumbo which due for delivery in 2010; and the A-350 whose delivery is expected to begin in 2012.

He said UB Holdings had financed the airline's plans for operating narrow-bodied Airbus A320 family for domestic flights.

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