Kingfisher, Air Deccan set to rationalise fleet plan

Days after acquiring control of Air Deccan, Kingfisher Airlines Chairman Vijay Mallya is now looking at rationalising the fleet of the two carriers and considering changes in the total fleet order of 90 aircraft.

"We are considering swapping or switching the orders," Mallya said on the sidelines of the Annual General Meeting of the International Air Transport Association (IATA)here.

The orders were placed by the two airlines before his UB Group bought 26 per cent stake in the low-cost carrier.

The UB Group will soon be launching an open offer to buy another 20 per cent stake in Deccan Aviation that operates Air Deccan.

He said both Kingfisher and Air Deccan would "revisit their fleet plans" in coordination with each other to rationalise the fleet structure.

On the future of Air Deccan, which is currently bearing big losses, he said: "Air Deccan will be profitable."

Both the airlines have already placed orders from the European aircraft major, Airbus Industrie, for about 90 aircraft. These include five of the largest aircraft - A380, the first of which is slated to be delivered to Kingfisher by 2011.

Industry sources here said the Kingfisher is likely to revise its earlier orders and place fresh orders for wide- bodied A330-400s for use on the India-US sector.

They said the fresh orders, likely to be placed at the upcoming Paris Airshow starting mid-June, would include five A340-600s also.

Describing the process of consolidation in the Indian civil aviation space as good and well-timed, the sources pointed out that the recent mergers and acquisitions would also lead to reducing the over-capacity existing in the market and thereby stabilise the prices, increase yields and bring down costs.

Besides Mallya's company picking stake in Air Deccan, the Indian aviation sector has seen two other M&A deals involving Jet Airways-Air Sahara and Air India-Indian this year. Mallya had told last year that consolidation was inevitable in the industry, while predicting a shakeout reminiscent to that of the 1990s when several private carriers folded-up.

Jet Airways and Air Sahara were the only two private carriers that had survived the turbulence in the sector. Air Sahara, however, was taken over by Jet in April this year after a nearly year-long legal battle. The consolidation continued with the Union Cabinet giving a go ahead to the merger of national carriers Air India and Indian to take on global competition and leverage on their synergies. The new entity is likely to be functional from July.

Last year, Tata Group acquired under 10 per cent stake in budget carrier SpiceJet.

Kingfisher and Air Deccan would together have a fleet of 71 aircraft, 70 destinations and 33 per cent market share.