The Kingfisher Financial Soup: Customer Becomes The New Ingredient

Posted on March 27, 2012 in Biz and Eco

By Nitum Jain:

As Kingfisher Airlines is trying to keep its head above water, the travel portals refuse to suffer losses alongside. Kingfisher has been muddling through financial soup for a while now and as it struggles to pay off its debts, it has started to make fliers distrust the airline and hesitate from flying with it, despite Kingfisher accounting for one in every five flights in India. This was once the second largest Indian carrier, but has now reduced its massive operation of 460 flights with 64 airplanes to a humble 100 flights with 16 planes; and despite submission of multiple fight plans, the airline has been unable to keep to them, further reducing its ticket sales due to disgruntled customers.

The International Air Transport Association suspended Vijay Mallya’s airline from its inter-airline transaction body ICH (IATA Clearing House) and BSP (Billing and Settlement Plan) accounts on March 9 because of its pending dues. This prevents the airline, which used to sell more than 80% of its capacity through travel portals, from selling tickets directly through them anymore. These portals had spent huge amounts of money to stock up Kingfisher inventory, and now are trying every way possible to get rid of the very same inventory as soon as possible with minimum losses.

Kingfisher, along with the portals such as makemytrip.com, yatra.com and goibibo.com, has devised a plan to employ the business strategy of Opaque Fares. This has been put to exercise since last November, where money-conscious customers are lured by amazing cheap fares and large discounts for different sectors; however, the name of the flight is not disclosed until the monetary transactions have already been taken care of.

It’s the passengers here who are finally at loss considering the irregularity of the cash-strapped airline’s flight schedules. Cancellations have been a common occurrence with Kingfisher since the past few months, and this will leave any customer who lands a flight with the airline through this deal anxious rather than enjoying the money they saved on it.

While many such portals are actively catering this scheme to its customers, some are sceptical and do not want their customers to go through the distress of a bad experience which might injure their goodwill in the market in the long run. As for now, the scheme is working, if it will make a dent in the huge losses that Kingfisher has incurred, we are yet to see.

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