With domestic passenger traffic in the low-fare segment growing at a high pace, Kingfisher's decision to close down its low-cost arm would give additional space to the major no-frill carriers to expand their operations, industry sources said on Thursday.
The decision to close down Kingfisher Red was announced by airline group chief Vijay Mallya on Wednesday who said this was being done 'because we don't intend to compete in the low-cost segment'.
SpiceJet, GoAir and IndiGo, along with the low-cost arms of Air India and Jet Airways, have already established themselves well in the domestic and, in the recent past, in the international markets.
With the decision to end the Kingfisher Red brand over the next four months, Mallya's airline would have to aggressively compete more fiercely on the full-service segment with other carriers, the sources said.
This competition may affect Kingfisher's market share and financial performance because of the competition posed by Jet Airways, as also by Air India which is likely to get continued government backing, they said.
However, improved service levels and product offered by Kingfisher might give its competitors a tough time, the sources pointed out.
They said Kingfisher's exit from the low-cost brand would definitely give a fillip to other such carriers at a time when more and more people, including business travellers, were flying by these airlines.
Official passenger traffic data shows that low-cost carriers accounted for 50 per cent of the total passengers traffic in the first seven months till July, up from 39 per cent in 2009.
Image: Vijay Mallya
