The Hindu Business Line : Air Deccan asks Airbus for early delivery of A320s

SHORTAGE of leased aircraft and increase in demand for seats have forced Air Deccan to ask Airbus Industrie to advance the delivery schedule of A320s.

An official with Air Deccan told Business Line that there has been a huge growth in the sector leading to shortage of leased aircraft. Hence the airline had written to Airbus Industrie requesting it to advance the delivery schedule by a year to 2006. Air Deccan has ordered for 30 more A320s worth $1.8 billion whose deliveries will begin from 2007.

The official said the airline has already given advance money. The airline has drawn around $30 million from the funds invested by ICICI Venture Capital and Capital One which is around $40 million. Half of the $30 million has been given as advance money for purchase of aircraft. The airline has issued convertible debentures to the two equity partners which will be converted into equity once the IPO is floated. The official said the airline has started work on floating an IPO, though he did not disclose its timing. He said the airline was examining various financial models before firming up plans for an IPO.

Air Deccan has set a target of over 200 per cent growth in revenues this fiscal to around Rs 1,000 crore and expects a similar growth next fiscal also. But, achieving the target rests on the availability of more aircraft. According to airline consultants, there is a shortage of aircraft such as A320s and B737-800s leading to a spurt in leasing rates. Lease rates have increased between 15 per cent and 20 per cent to about $2,75,000 per month.

Being a low-cost airline, Air Deccan needs to operate more flights to sustain its business model and hence needs to have more aircraft. The airline operates 100 flights a day to 32 destinations. To break even, it costs the airline between Rs 2,000 and Rs 2,500 per ticket on a flying time of one hour on an Airbus A320. It expects to add at least one ATR or an Airbus every month from this month onwards.

During 2004-05, Air Deccan posted revenues of around Rs 315 crore and posted a marginal profit.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Airbus remarks not to hit IA order for 43 aircraft'

Air Deccan asks Airbus for early delivery of A320s

Software comes to creator's aid in foreign land

'Railways loses Rs 702 cr on non-revision of II class fares'