Air Deccan to remain low-cost, says Gopinath

Now, UB Group has raised its stake to 46% in Deccan Aviation

Air Deccan Chairman G Gopinath today clarified that Air Deccan will retain its business model as a low-cost carrier and the two airlines "� Deccan and Kingfisher "� will continue to operate as separate brands, even if the airlines are merged.

Gopinath was replying to questions on speculations of a reverse merger between the two airlines at the promotion of its tie-up with travel portal cleartrip.com.

Cleartrip sells around 6,000 air-tickets a day, which includes 1,500 for Air Deccan flights.

Asked whether Deccan would consider the option of a merger or a reverse merger, Gopinath said, "We will continue to be different entities. Kingfisher will continue to be a full service carrier, while Deccan will be on the other side of the spectrum. Such a large amount of money would not otherwise be spent on the rebranding exercise."

Kingfisher and Deccan have appointed Accenture and other consultants to study the entire merger structure of the two airlines, including operational synergies, network rationalisation and management structure.

"The report will be studied by Mallya and myself and subsequently by the board of directors. Only then will a decision be taken," said Gopinath.

Earlier this year, the UB Group had acquired 26 per cent stake in Deccan Aviation for Rs 550 crore. The group has now increased its stake to 46 per cent by buying shares in an open offer.

The Kingfisher-Deccan combine currently covers 75 destinations across the country.

Talking about his interest in low-cost airports, Gopinath said that Deccan had formed a consortium with Mumbai Airport International (MIAL) for the development of low-cost airports in Karnataka.

The Karnataka government had recently invited bids for development of airports at Gulbarga, Bijapur and Shimoga. Apart from the Deccan consortium, Tata-Changi were among the prominent bidders for the projects.