Deccan Aviation to hive off rotorcraft biz

Deccan Aviation, which operates the country's biggest low-fare airline, plans to turn its helicopter business into a separate company and raise money to expand the unit, Managing Director G R Gopinath said.

The Bangalore-based company will sell a stake to private investors in the proposed helicopter company and later consider an initial public offering, Gopinath said in an interview in Bangalore yesterday. The airline has begun preliminary work on the proposal, Gopinath said.

Kingfisher Airlines and other Indian companies are starting helicopter services as corporate demand gains in the world's second-fastest growing major economy and private wealth boosts leisure travel.

Goldman Sachs Group Inc and BNP Paribas are among those investing in Indian airlines as demand for air travel rises 25 per cent annually.

"Helicopters are going to be a big business in India," said Kapil Kaul, chief executive officer of the Indian unit of the Centre for Asia Pacific Aviation. "If Deccan can split it into a separate unit and raise money for expansion, it's a very good deal."

India's economy is forecast to grow 9.2 percent in the year ending March 31, following a 9 percent gain the previous year, according to the Central Statistical Organisation.

Economic growth is increasing demand from oil companies to charter helicopters for their rigs, from corporations including Nestle SA and Reliance Industries Ltd., and from political leaders, who hire aircraft for official tours.

Helicopter companies including Global Vectra Helicorp are selling shares through initial public offerings to expand. Kingfisher Airlines, owned by the nation's biggest brewer, is starting a helicopter tourism service.

"The wealth creation in the country will further increase the demand for helicopter services,'' Gopinath said. The former army captain and silkworm farmer started Deccan Aviation in September 1997 with a single helicopter and the advertising slogan, "If it's on the map, we take you there."

Deccan Aviation now has nine helicopters and two propeller planes catering to oil companies, tourism, and flying customers to Hindu shrines in the Himalayan mountains. The proposed new unit will acquire more helicopters and business jets to cater to the increased demand, Gopinath said. The company has already ordered two business jets, he said.

Kingfisher Airlines is in talks with three companies to buy six craft for its new helicopter unit, said Vijay Mallya, the airline's chairman, on February 6 in Mumbai. The company wants to start a helicopter charter service for companies and also offer services to business-class passengers of its airline.

Deccan Aviation started the Air Deccan low-fare airline in September 2003 and now has more than 40 planes, with 90 more on order.