The Hindu Business Line : Deccan Aviation’s charter division to be listed separately

Chennai, Jan. 21 Deccan Aviation’s plans for hiving off its charter division into a separate company has not been affected by the Kingfisher Airlines picking up a 46 per cent stake in the company. Deccan Aviation had announced to the stock market in April 2007 about its intention to put the charter services into a separate company. Deccan Aviation’s Managing Director, Capt G.R. Gopinath, told Business Line last week that the hive-off plan was very much on.

Deccan Aviation started off as a chartered flight company and, when the aviation industry was opened to the private sector, began the airline. Today, the charter division has nine helicopters and three fixed-wing aircraft. But the company has grown in size, thanks to the airline division.

The charter division earned revenues of about Rs 60 crore against Rs 2,500 crore of the whole company. “This business needs to be given focus and grown separately,” Capt Gopinath said, adding that hiving off the charter business and getting the new company listed on the stock exchanges would “unlock shareholder value”.

Asked if the new company would come out with an initial public offering, Captain Gopinath said he would first need to first “pull out” the charter division and put it into a separate company.

Meanwhile, Deccan plans to introduce flights to the Gulf from September. In August, the company would complete five years of existence, making it eligible for offering international services.

It is now clear that after the reverse merger of Kingfisher Airlines with Deccan Aviation, after which there will be one company but two airlines, Deccan will fly short-hauls and Kingfisher the long ones. Capt Gopinath said that Deccan was considering destinations in West Asia and South East Asia. However, it is learnt that the airline will make its international debut with West Asia.

According to Mr R. Krishnaswamy, Project Coordinator, Deccan Aviation, other than Dubai in West Asia and Singapore in South East Asia, all other destinations are available – other Indian carriers have used up the quota for Dubai and Singapore.

Just as for domestic routes, Deccan will position itself as a low-cost airline on international operations too. Other officials of the airline expect positive spin-offs from the imminent termination of the management agreement of SriLankan Airlines and the Dubai-based Emirates.

Sources point out that all is not well with the agreement, which comes up for revision in March. Emirates, it is said, is miffed over the Sri Lankan Government introducing competition in the form of a low-cost airline, Mihin Air. Emirates has a 43.5 per cent stake in SriLankan.

In 2006-07, SriLankan carried 1.1 million passengers into and out of India and a portion of them were those who travelled on the airline between West Asia and India, via Colombo. If the agreement between SriLankan and Emirates is not extended, this market would become available to Indian carriers, sources noted.

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