Air Deccan, India's largest low-cost carrier, has been running short of cash and had been seeking an investment partner to provide more funds to help it continue with its ambitious expansion programme, which includes adding dozens of new Airbus Afamily and ATR turboprop aircraft. The marriage is an unlikely one, as Kingfisher is a full-service carrier while Air Deccan is a strict no-frills operator. Kingfisher and UB Group chairman Vijay Mallya has said many times that he believes no-frills carriers cannot be successful in India. Gopinath, one of Air Deccan's founders, says the deal was agreed only after he was satisfied that Mallya would not take full control. But how long Air Deccan will be able to remain independent is an open question, as UB Group has only said it will maintain separate operations for Air Deccan and Kingfisher for "the near future". Mallya also told Airline Business at the IATA annual general meeting in Vancouver that he expects to secure majority ownership of Air Deccan through the public offer he will soon be making.
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MUMBAI Reuters - Deccan Aviation Ltd will merge the scheduled airline operations of unlisted Kingfisher Airlines, to create one of the biggest air carriers in the country and pave the way for the latter to fly overseas. R Gopinath and the UB group, Deccan said. The combined entity will operate the two brands — Deccan, a low-cost airline, and Kingfisher, a full service carrier, Nedungadi said.
The legal process will take anywhere between months. The merger was recommended by consultancy firm Accenture and the merger methodology will be suggested by consultants KPMG and Dalal and Shah. The two airlines have a combined loss of about 20 billion rupees and this can be set off against future profits.
Nedungadi said the maintenance and engineering divisions will remain with the combined airline for now. UB group will also look at rationalising capital expenditure. The two airlines, which control more than a quarter of the market, have ordered more than Airbus planes. Deccan was started in and will be eligible to offer overseas flights by mid UB group chairman Vijay Mallya will be the chairman and chief executive of the merged entity and Gopinath its vice-chairman, Deccan said in the stament.
Deccan shares, which hit a high of rupees on the news, were trading 2. Discover Thomson Reuters. Directory of sites. United States. Business News. Deccan Aviation Ltd will merge the scheduled airline operations of unlisted Kingfisher Airlines, to create one of the biggest air carriers in the country and pave the way for the latter to fly overseas.
Kingfisher buys large Air Deccan stake
This is despite the fact that on the face of it, both the airlines, leave alone the personalities of their promoters, differ as chalk as cheese! If Air Deccan was positioned for the masses, Kingfisher Airlines is unabashedly for the classes. Both cater to different segments of the society and have different models. And hence their marriage appeared to be a recipe for disaster. But hard business sense points out that it is not the case. And both have plans to acquire more Airbus aircraft. Scarce manpower can be optimally utilised, insurance premium and lease rentals can be re-negotiated, infrastructure like engineering, ground handling, training can be combined.
Vijay Mallya bought Air Deccan with his eyes closed. His team never went through the books of the loss making Air Deccan before Mallya agreed to buy it for a total consideration of Rs crore in At least that is what the book, called "The Vijay Mallya story" suggests. Written by senior journalist K Giriprakash, the book also speaks of how Mallya rushed into the airline business with Kingfisher Airlines, despite his close associates warning against the move.
The inside story of Vijay Mallya's tumble: He bought Deccan with eyes closed
The merger will create the largest player in the domestic aviation market and pave the way for Vijay Mallya to fly his Kingfisher Airlines to overseas destinations. Deccan Aviation will subsequently be renamed Kingfisher Airlines. Both the airlines are in the red. While Deccan Aviation reported a loss of Rs crore for the year ended June 30, , Kingfisher Airlines had a loss of Rs crore on its books for the year ended March 31, The new firm will operate two separate brands — Deccan and Kingfisher — and will retain their identities of being a low-cost carrier and a full-service airline, respectively.