KIngfisher Airlines is to shut down Kingfisher Red, its low cost operation.
Vijay Mallya, Kingfisher’s chairman, said he would now focus on his full service carrier, Reuters reported.
He told journalists during the group’s aunnual meeting: "We are doing away with Kingfisher Red because we do not wish to compete in the low cost segment.
"We believe that there are more than enough guests who prefer to travel the full service Kingfisher class and that shows through in our own performance where load factors in the Kingfisher class are more than Kingfisher Red."
Kingfisher Red was started just over four years ago but there is cut throat competition in the Indian airline industry as well as rising fuel costs.
Mallya said that margins at Kingfisher Airlines were higher thanthose at Kingfisher Red becasue yields were better.
But his move represents a shift in Indian aviation industry where most carriers are moving towards the low cost model, including one of the major carreirs Jet Airweays which is increasing its low cost operations.
Reuters reported that Kingfisher was working with a consortium of banks to reduce interest costs and raise working capital as it looks to restructure its fleet by selling and leasing back some of its aircraft to lower debt.
"The high cost of ATF (aviation turbine fuel) coupled with a weakening rupee is the biggest challenge that the whole aviation industry in India is currently dealing with and we are no exception," Mallya said in his speech at the shareholders' meeting.
Shares of Kingfisher Airlines have lost about 63% in value in a year, with the company suffering losses on high oil prices and intense domestic competition.