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Plans to remove onboard bar to create space.

Kingfisher Airlines is going for another image makeover. After shutting its no-frills Kingfisher Red brand, the cash-strapped airline is considering a reconfiguration of its five Airbus A330 planes in a bid to improve revenue from international routes. The plan includes removal of onboard bar and adding economy or premium economy class seats in the A330 planes.

Kingfisher flies Airbus A330 planes on London and Hong Kong routes. Currently, one of the five planes is grounded. An email query to a Kingfisher spokesperson remained unanswered.

An airlines source says the bar section is situated behind the cockpit. “It occupies the entire width of cabin and comprises of counter, sofas and stools,” he adds. The bar is open only to the executive class (Kingfisher First) passengers. The carrier’s Airbus A330 has 217 seats (30 first and 187 economy). Air India and Jet Airways also operate these planes.

An aviation expert notes that the bar is popular among the Kingfisher First passengers. “They can relax, stretch legs and chat over drinks. But, as far as revenue is concerned, it is a wasted space.”

It is learnt that the airline is considering adding up to 40 economy- or premium economy-class seats in the space freed up by removing the bar. “It could cost up $15 million (Rs 75-80 crore) to reconfigure each aircraft,” notes the expert. “But, it will bring in additional revenue for the airline.”

Pradip Lulla, former president of Travel Agents Federation of India says the reconfiguration will enable Kingfisher to compete effectively on international routes. “The airline is currently unable to command a premium just because it offers an on board bar,” he adds.

Amongst the international airlines, British Airways and Air France have a premium economy-class seating on India routes. Fares are 1.5 times than those of economy class, but passengers get wider seats and more leg-room.

Kingfisher Airlines is facing a serious cash crunch, forcing it to downsize operations in the domestic sector. The airline posted Rs 469 crore loss in second quarter the current financial year. In the international sector, revenues increased 11 per cent but its Ebidta (earning before interest tax depreciation and amortisation) loss increased from Rs 53 crore to Rs 76 crore over the same period previous year, because of high fuel costs.

At the company’s annual general meeting in September, chairman Vijay Mallya announced that Kingfisher would completely exit no-frills business. The airline, which began operations in 2005, has reconfigured one of its all economy airbus A320 planes and added 8 business class seats in it, according to a source.

Mallya says the full-service product gets higher yield than a low cost brand. The airline had said that it would, over the next four months, reconfigure all its airbus A320 aircraft (operating on domestic routes). This would include its single cabin aircraft into dual cabin aircraft, with a reduced premium business-class cabin and an increased number of full-service economy-class seats leading to a capacity increase of approximately 10 per cent.

However the reconfiguration plan can move forward upon the airline’s ability to raise cash. The airline is looking for Rs 600-Rs 700 crore of additional working capital debt, but apparently the banks have insisted that they would not release additional funds till the carrier clears the pending interest dues. Kingfisher’s total debt is Rs 6,149 crore.

Twice this year, Hindustan Petroleum suspended fuel supplies to the airline. A few of its bank accounts were frozen and later de-freezed as the airline defaulted on service tax liability. Till yesterday, Kingfisher had not paid salaries to majority of its employees.

Earlier this month, minister of state for finance Namo Narain Meena told the Lok Sabha that public-sector banks had no plans for a second round of debt-restructuring for troubled Kingfisher.

Source By Business Standard(Date:31/12/2011 Time:11:45PM )

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