Kingfisher Airlines is looking to lease both wide-body and narrow-body aircraft to meet an unanticipated surge in demand as the domestic economy recovers more quickly than expected, Chairman Vijay Mallya said on Monday.
Mallya told reporters on the sidelines of the International Air Transport Association's annual meeting in Singapore that he saw demand increasing on both international and domestic routes.
Asked if Kingfisher's current capacity was enough to cater to projected demand, he said: "Not quite, that is why we are looking for leased capacity."
"Kingfisher at one time had several aircraft that were on order from Airbus for delivery in 2010 and 2011. During the 2008-2009 crisis, I actually postponed the delivery of those aircraft to 2012 and 2013.
"So right now we are looking for capacity but our own new deliveries will start in about 18 months."
He said he was looking to lease both narrow-body and wide-body aircraft.
"We have been experiencing for the last six months unprecedented load factors, which I have never seen in the last six years," Mallya said.
"We are running at mid to high 80 percent on every flight, which is extremely healthy."
According to its website, Kingfisher has 66 aircraft, mostly Airbus jets and ATR turbo-prop variants.
The flamboyant Mallya, who controls the United Breweries Group, owns a Grand Prix motor racing team and a team in IPL cricket league, said Kingfisher's growth should be enhanced as it joins the Oneworld airline alliance, which also includes Cathay Pacific, British Airways and Qantas.
"The opportunities to leverage this alliance are huge," he said, adding that Kingfisher would become a fully operational member by 2012. "We see this as being a contributor of about 5-6 percent of enhanced revenue to us."
He said Kingfisher was continuing to lobby the government to allow foreign airlines to take stakes in Indian carriers.
"Airlines in India must raise capital, and the opportunity to raise capital from foreign airlines must not be excluded and that's why we will continue to request the government of India to reconsider its foreign direct investment policy."
Kingfisher flies to 8 international destinations and to over 50 towns and cities in India. Its fleet of turboprop aircraft will help it to respond to the pattern of wealth creation in India, Mallya added.
"There is a lot of wealth in tier-2 and tier-3 cities that is being created," he said. "It is no longer a situation where wealth in India is restricted to the big metro cities, so it offers a huge amount of opportunity.
"Kingfisher is well positioned because it has a large number of ATR aircraft which are ideal to service the emerging demand in tier-2 and tier-3 cities."
Source:reuters.com
Vivek Agrawal
Summer Intern-Fundamental Analysis
DENIP Consultants Pvt. Ltd.
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