The Hindu Business Line : Air Deccan to throw open seats for bidding; mulls IPO

THE country's first `no frills' airline, Air Deccan will throw open its seats for bidding from next month and as part of its expansion plans, it is considering a move to go public.

The Managing Director, Capt G.R. Gopinath, told Business Line that the software to introduce dynamic pricing is ready and the scheme would be launched when the airline starts flights on trunk routes in late July.

Under the dynamic pricing scheme, customers can bid for tickets, 90 days before the departure date through the Internet and can buy them for as low as 50 per cent of the original cost while the topmost price close to the departure date will be around 20 per cent less than the normal fare. Air Deccan's normal fares are lower by 50 per cent of the cost of a regular airline ticket.

The airline plans to go public but would take a firm decision only after consultations with the new investors who will come in once the $60-million funds are tied up within another three months.

Rothschild is the investment banker and currently a road show is under way in Singapore and other places for raising the funds. These funds will be utilised for funding expansion plans that include fleet increase.

Capt Gopinath said in another five years, the airline plans to have a fleet strength of around 60 comprising 30 ATRs and an equal number of Airbus aircraft.

Air Deccan has already lined up 11 Airbus A320-200 to be inducted in phases into its trunk route services to start form July 26.

The new routes will primarily connect Delhi from various destinations including Mumbai, Hyderabad and Chennai. The airline has also taken on lease five more ATRs, which will connect the northeast with Kolkata and Delhi and places such as Surat, Bhavanagar, Deharadun, Kanpur and Ranchi.

Air Deccan currently operates 50 flights and its fleet comprises five ATRs and three Airbus aircraft. It has attained a seat load factor of 83.

The airline has already started earning cash profits on a monthly basis and is expected to start making profits by the end of the current fiscal. It expects to post revenues of around $130 million by the end of the current fiscal.

Currently, there are five individual investors who have funded the parent company, Deccan Aviation Pvt Ltd, of which Air Deccan is a wholly owned subsidiary.

These investors are Mr Kenichi Miyagawa who holds 30 per cent equity, Capt G.R. Gopinath who holds 26 per cent, Capt Samuel holds 25 per cent, Mr Ladhani holds 10 per cent and Mr Vishnu Rawal holds 9 per cent equity.

Of these, Mr Miyagawa is an American while Mr Rawal is a non-resident Indian.

The paid up equity is around Rs 10 crore. The company has also raised debt from Bank of India.