Even as Kingfisher Airlines of India fights for survival, the increasing costs of fuel have claimed one more victim in the form of Pinnacle Airlines of US. While the hike in fuel costs is one of the main reasons for the debacle of both of them, there are more differing reasons behind their own set of problems. Hike in fuel prices has led to the increase of the prices of the otherwise cheap air tickets which were provided by all the airlines leading to the reduction in demand of travel. The shrinkage in market has been more in the smaller towns and cities where the smaller airlines such as Pinnacle operate.
Kingfisher's losses are a result of an over-ambitious policy aimed at garnering major share of the domestic aviation market and expanding rapidly into the international sectors of travel as well. To effect this policy the airlines embarked on an aggressive strategy of providing cheap air tickets to the customers and the acquisition of Air Sahara to make a quick foray into the international flights segment without waiting for the mandatory 5 year period of domestic operations to get over. The result was that the airlines never booked profits and compiled losses year after year. To tie over its finances, there was heavy debt burden which further undermined its viable operations. So, as the mismatch between the revenues and expenses grew, it resulted in the salaries of the staff becoming overdue and the airlines failed to meet its financial commitments. To make the matters worse, the customer's confidence was lost due to erratic flight schedules and frequent cancellations of flights. It shall be noted that the other LCC airlines, operating mainly from the smaller Indian towns and cities, have been doing fairly well during the same time period.
The Pinnacle Airlines, on the other hand, has had its own reasons of becoming unviable for flight operations. Pinnacle Airlines has been providing the domestic and the cheap international flights to adjoining countries of US, essentially as connections flights to the major airlines. So, while Kingfisher is a major airline in its own domain, the Pinnacle Airlines is more in the niche market of providing connecting flights. Being a junior partner, its operations have been hit as a result of reduction in the flights of major airlines to the smaller destinations by the major airlines which have begun to focus more on large cities with bigger aircraft in order to set-off consequences of fuel hike. The restricting of the aviation industry operations has been the main reason behind its debacle, caused due to the increase in fuel prices. However, Pinnacle has not done as badly as Kingfisher on the front of serving the customer. Bankruptcy filing is one of the way in which Pinnacle seeks to renegotiate the contracts with labour and staff, while Kingfisher management is more at the receiving end of the delays in payment of salaries to the staff.
The author is associated with an online travel company of India which provides the booking facility of domestic and international flights, hotels and holidays. You can find the cheap air tickets for travelling to any destination within the country and outside with this online company.
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