Kingfisher Airlines’ big win; shifts alliances landscape in Asia with oneworld move. BA to invest?

Jet has close relationships with oneworld members American Airlines and Qantas. It is unlikely these relationships can endure once Kingfisher develops its partnerships with its oneworld partners. Jet also has codeshare deals with Star Alliance members Air Canada, ANA and Brussels Airlines, which could also be threatened by Air India's eventual Star accession.

Jet Airways' shares fell 4% yesterday, while Kingfisher eased 1.7%.

Jet Airways, Air India and Kingfisher Airlines codeshare partnerships

Source: Centre for Asia Pacific Aviation & OAG

Big win for Kingfisher; oneworld's hot streak continues

The oneworld decision is a massive win for Dr Vijay Mallya,

The move also continues oneworld's hot streak, this month alone retaining Japan Airlines in oneworld, winning the US DoT's recommendation for antitrust immunity on the Atlantic and the extension of BA-Qantas' joint services agreement on the kangaroo route between Europe and Australia. Next for the alliance will be the BA-Iberia merger, to probably be announced next month.

Winners are grinners: oneworld's hot streak continues

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From left: oneworld Managing Partner John McCulloch, Royal Jordanian Chief Executive Hussein Dabbas, Cathay Pacific Chief Executive Tony Tyler, British Airways Chief Executive Willie Walsh, Kingfisher Airlines Chairman and Chief Executive Vijay Mallya, Qantas Chief Executive Alan Joyce, American Airlines Senior Vice-President Planning Virasb Vahidi, and Finnair Vice-President Alliances Paavo Virkkunen.

Kingfisher Airlines' addition to oneworld will link India's most extensive domestic network with oneworld's global network, adding 58 cities to the oneworld map - all of them in India. oneworld is the only alliance with airlines based on every continent and could be the first in India.

The move gives BA a big leg up over Lufthansa, further cementing Heathrow's position as the European hub of choice for Indian passengers. It also comes as Air India considers shifting its European hub away from Frankfurt.

Kingfisher Airlines carried 10.9 million passengers in the financial year ended 31-Mar-2009 with a 27% share of the fragmented domestic Indian air travel market. For the nine months to 31-Dec-2009, it carried 8.2 million passengers. Its fleet of 66 aircraft, with an average age of five years, includes five Airbus A330s, eight A321s, 23 A320s, three A319s and 25 ATR 72-500s and two ATRs. It employs 7,400 staff.

The airline launched its first international routes in Sep-2008 and now serves Bangkok, Hong Kong, London Heathrow, Singapore, Colombo, Dubai and Dhaka. In total, it operates to 70 destinations worldwide - 63 of them in India - in eight countries, with its main hubs at Mumbai, Delhi and Bangalore.

British Airways will support Kingfisher through its alliance implementation programme, as its oneworld sponsor. Kingfisher's domestic network has been covered since 01-Jun-2009 by the Global Explorer round-the-world fare offered by all oneworld airlines, and is in talks with BA for a codeshare agreement to cover Kingfisher's new daily Delhi-Heathrow service commencing in late Mar-2010, as well as domestic Indian services.

Getting the bride ready

The real game plan behind Dr Mallya's oneworld push is to secure a strategic investor in his carrier, once foreign airline ownership restrictions in Indian carriers are eased - probably within two years.

Within this timeframe, Kingfisher has the opportunity to further streamline its operation (the last two years has demanded a financial discipline hitherto not found at Kingfisher), and add value to its business via its alliance partners, to prepare for a famous Indian wedding.

Kingfisher Airlines Chairman and Chief Executive Vijay Mallya stated, "becoming part of oneworld would be one of our most significant steps so far - and is right in line with our vision to become one of the world's top airlines…It will strengthen us financially, through revenues from passengers transferring to our network from our oneworld partners and the cost reduction opportunities the alliance offers."

BA needs to be in India and has looked at other options, including GoAir, in the past. Kingfisher's international product is much more closely aligned with BA's and the two could have a formidable presence in a market increasingly dominated by sixth freedom Middle East carriers, reinforcing the Heathrow and Mumbai/Delhi hubs. Qantas Group is also engaging actively in the Asian region with investments to date in Jetstar ventures in Singapore and Vietnam.

BA CEO, Willie Walsh, stated, "Kingfisher Airlines is an ideal fit for oneworld. It has a strong focus on customer service and its network expands what the alliance currently offers. oneworld's priority is the quality rather than quantity of our member airlines, which is why British Airways is delighted to be developing our relationship with Kingfisher Airlines further by acting as its sponsor into the alliance."