The Hindu Business Line : `Air Deccan open to acquisitions'

Acquisition conditions
The acquisition should lead to increase in market share.
There should be synergies in terms of operations and culture.
The acquisition should bring value to airline in terms of better technology.

Capt. G.R. Gopinath

Bangalore , Aug 23

Within weeks of overtaking Indian as the second largest airline in the country, Air Deccan has said that it is `open' to acquire another domestic airline as it sets its sight to replace Jet Airways from its top position.

In what is seen as a clear indication of the airline's growing strength in the industry, the Air Deccan Managing Director, Capt G.R. Gopinath, told Business Line that the airline is willing to acquire another domestic carrier if it can lead to increase in market share.

Growth conditions

"We are open to acquire another domestic airline if the fit is right. We do not rule out inorganic growth to increase our market share," he said on the occasion of the third anniversary of the airline.

He, however, said that the airline is currently not considering any acquisitions.

Capt Gopinath laid down three conditions for acquiring another airline. First, the acquisition should lead to increase in market share.

Second, there should be synergies in terms of operations and culture and third, the acquisition should bring value to the airline in terms of better technology.

Capt Gopinath said the airline should be able to displace Jet Airways from being the largest airline in the country in another year or two.

"It is possible because of our business model which is volume driven," he said. But, Capt Gopinath said the bigger challenge is to create a great airline and not to overtake Jet Airways.

Improving time

He said the airline has been working on improving its own time performance and for the last eight weeks, 80 per cent of its flights have taken off within 15 minutes of the scheduled departure time while 98 per cent of its flights have taken off within an hour of its scheduled departure time.

"We now have a team of 12 to 13 people at the top drawn from various international airlines who are working on every aspect of the airline to make it the most preferred airline in the country," he said.

The Air Deccan Director for Finance, Mr M.G. Mohan Kumar, said the airline expects to post 110 per cent increase in revenues to around Rs 2,000 crore by March, 2007. In March 2005, its revenues were around Rs 320 crore while it posted a loss of Rs 20 crore in the same year. He said the debt component of the airline is around Rs 120 crore because of the pre-delivery payment financing of its aircraft. He said the airline will have a fleet of 64 aircraft by the end of this year and by 2008, it should have a fleet of between 78 and 80 aircraft.

By 2007-08, the number of passengers the airline will carry is expected to increase to around 9 million from around 7 million currently.

Rs 3 per seat offer

Air Deccan on Tuesday announced that it would offer three lakh seats at Rs 3 per seat for travel for three months starting from November.

The offer coming in the wake of the airline's third anniversary is part of its strategy to encourage and enable more passengers to take to flying, said a company release.

The passengers have to the pay the statutory taxes extra.

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