Mallya to turn around Air Deccan this year

Billionaire Vijay Mallya, whose flagship company bought a stake in Deccan Aviation, expects to turn the budget carrier profitable by raising its fares and sharing its functions with Kingfisher Airlines.

"Some of the synergies between Air Deccan and Kingfisher are already being exploited, and I am confident that Air Deccan will turn profitable in this financial year,'' Mallya told reporters in Mumbai today. Deccan reported losses worth Rs 2.13 billion ($52 million) for the quarter ended March 31.

Mallya's United Breweries Holdings bought 26 per cent stake in Deccan for Rs 5.5 billion on May 31 and has offered to purchase an additional 20 per cent in line with the Sebi norms.

The stake buy would reduce aircraft and maintenance costs as both the airlines fly Airbus SAS and Avions de Transport Regional planes. According to Mallya, the Deccan stake purchase will generate savings of Rs 3 billion in the first year itself due to the sharing of aircraft and workers.

Deccan had recorded a net income of Rs 96.4 million in the quarter ended December 31, its first profit since an initial public offering last year.

Air Deccan filled 85 per cent of seats last month compared with 82 per cent a year earlier. The passenger numbers rose 32 per cent to 704,043. The airlines has 350 daily flights to 65 destinations in the country.

Kingfisher, which connects most cities in the country, is planning to start non-stop flights linking New York and San Francisco with technology hub Bangalore in 2008, Mallya said. It is the only Indian customer for the Airbus SAS A380. Kingfisher plans to order five more superjumbos this month.