The Hindu Business Line : UB Group to retain name of Simplifly Deccan

Sets of offerings
The merged entity will have three types of offerings: no frills carrier, full service carrier and two-class carrier
The group will take the debt route to raise funds worth Rs 1,000 crore for the airline’s expansion plans

K. Giriprakash

Bangalore, May 10 The UB Group has decided to retain the name of Simplifly Deccan for its low priced offering, but may not offer ‘rock-bottom’ prices any more.

The merged entity consisting of Kingfisher Airlines and Simplifly Deccan will have three types of offerings: no frills carrier, full service carrier and two-class carrier.

An official with the UB Group, which also runs Kingfisher Airlines, told Business Line that it will try to move away from offering fares which are essentially zero fares. “It does not make any sense to offer such fares any more, though our no frills carrier will continue to offer low fares,” he said.

Funding plans

As already reported, the group will take the debt route to raise funds worth Rs 1,000 crore for the airline’s expansion plans. It has already tied up with ICICI Bank to raise Rs 500 crore and is in talks with a few others to raise the rest of the amount.

“It will take some time for the stock market to bounce back but we are keen to expand faster. Hence, we are taking the debt route,” the official said. He said the airline will tie up for the rest of the funds in another two to three months.

Ever since the merger of the two airlines, the UB Group had tried to find the middle path for retaining the identity of both Kingfisher Airlines and Deccan in order to hold back its customers. An official with Deccan, who did not want to be identified, said that it was important for an airline to offer both sets of offerings.

“The low-cost airline helps the company to find new customers and expand the base of the passengers which in turn helps a full service carrier to make use of such an opportunity,” he said.

Turnaround soon

The official was confident that Deccan will be able to turnaround in another couple of quarters because the effect of merger will start showing results now. Both Kingfisher and Deccan have rationalised most of their operations which is expected to lead to lower costs, avoid route duplicity and a leaner work force.

For the third quarter of its financial year, Deccan Aviation which runs Simplifly Deccan reported a loss of Rs 199.65 crore which was over 6 per cent less than the corresponding period in the previous year. Its total income rose nearly 33 per cent to Rs 607.66 crore.