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Abstract

Kingfisher Airlines, a subsidiary of UB Group (United Breweries Holdings Ltd), founded in May 2005 operates a passenger airline in India. It was the first airline in India to provide premium first class service on domestic routes with all new aircraft. In May 2007, it announced it would acquire a 26% stake in Air Deccan, a low cost carrier (LCC) for 5.5 billion rupees ($135 million). In the loss-making Indian aviation industry, the Kingfisher-Air Deccan deal was the third after Air India-Indian Airlines and Jet Airways-Air Sahara. Analysts were of the opinion that the trend of consolidation in the aviation industry would help airlines to improve yield, but the anti-consumer environment due to a hike in air fares, might hinder its growth. On the other side, LCCs like IndiGo, SpiceJet, and GoAir airlines were also facing uncertainty due to the ongoing mergers and acquisitions in the highly competitive Indian aviation industry. Analysts fear that as a result, in the long run, the industry might be controlled by a few players.
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June 2007

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Abstract

Kingfisher Airlines, a subsidiary of UB Group (United Breweries Holdings Ltd), founded in May 2005 operates a passenger airline in India. It was the first airline in India to provide premium first class service on domestic routes with all new aircraft. In May 2007, it announced it would acquire a 26% stake in Air Deccan, a low cost carrier (LCC) for 5.5 billion rupees ($135 million). In the loss-making Indian aviation industry, the Kingfisher-Air Deccan deal was the third after Air India-Indian Airlines and Jet Airways-Air Sahara. Analysts were of the opinion that the trend of consolidation in the aviation industry would help airlines to improve yield, but the anti-consumer environment due to a hike in air fares, might hinder its growth. On the other side, LCCs like IndiGo, SpiceJet, and GoAir airlines were also facing uncertainty due to the ongoing mergers and acquisitions in the highly competitive Indian aviation industry. Analysts fear that as a result, in the long run, the industry might be controlled by a few players.

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June 2007

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