Business Daily from THE HINDU group of publications
Monday, Sep 04, 2006
Business Daily from THE HINDU group of publications Monday, Sep 04, 2006 |
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Logistics - Airlines Corporate - Business Models Mallya questions sustainability of low-cost carrier biz models Our Bureau
IS LOW COST SUSTAINABLE?: The Chairman of UB Group and Kingfisher Airlines, Mr Vijay Mallya, flanked by Ms J. Geeta Reddy, Andhra Pradesh Minister for Tourism, and Mr Ashwini Kakkar, President of TAAI, at the Indian Travel Congress, the 55th edition of the Travel Agents Association of India convention in Hyderabad on Sunday. - Mohammed Yousuf
Hyderabad , Sept. 3 "There is nothing low cost about low cost carriers. The cost remains the same. The difference is that they are offering lower fares now. But is this business model sustainable two years down the lane?" asked Mr Vijay Mallya, Chairman of Kingfisher Airlines. Speaking at the India Travel Congress here today, Mr Mallya said, "it is to be seen whether this model that airlines are now offering is sustainable two years down the line. Will they be sustainable two years from now? What kind of business model is that if they cannot cover their operating costs?" The Indian aviation industry is witness to rapid growth driven by IT, BTand KPO boom in the country be it in Bangalore, Hyderabad, Pune or Nagpur. However, it is wrong to take the 1.1 billion population into consideration to predict growth. Of this, the life of about 600 million farmers is confined to 100 sq miles. Referring to the need to strengthen infrastructure, he said it is time to improve infrastructure and focus on the growth of tourism sector. This will bring in sustainability to the sector. Reeling out numbers, he said that the domestic aviation traffic grew by about 50 per cent in the last one year if the January-June traffic of 2005 and 2006 is considered. This number is due to low fares and nothing else. Since the launch of Kingfisher in May 2005, Kingfisher has flown about 2 million guests. It now has about 13 Airbus aircraft and 4 ATRs and has been chosen No. 1 across all categories of air travel.
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