AIR DECCAN

'Air Deccan' is an airline based in Bangalore, India. It was India's first low-cost carrier, it is currently operating 350 flights to 64 destinations a day within India. Its main base is HAL Bangalore International Airport, with a secondary hub at Chennai International Airport, Chennai.

Contents

History

Destinations

Fleet

Aircraft orders

Competitors

Revenue

Air Deccan Acquisition

Controversies

External links

References

History

Air Deccan has grown rapidly since it first started air operations in August 2003, and despite its almost disastrous maiden inaugural flight (which caught fire)^[1], it has continued to grow.
On 25 January 2006, Air Deccan filed a Red Herring prospectus with the Securities and Exchange Board of India. Air Deccan plans to offload 25% of its stake in the IPO planned for late March or early April. 24.5 million equity shares of ten rupees each will be divested at a price to be announced later to raise Rs Cr ($250-300 million) The proceed from the IPO will be used to set up a training centre in Bangalore and a maintenance facility in Chennai. However, due to stock market downturn, Air Deccan's IPO barely managed to scrape through (after extending the issue closing date), but it was a flop on listing. Its shares were listed at a discount of about 50 per cent to the issue price of Rs 148.65-levels.
Although it has not yet been formally announced, Air Deccan has switched to U.S.-based airline reservations hosting service provider Radixx International (www.radixx.com) effective in late February, becoming the second major domestic Indian carrier to switch to the Radixx Air Enterprise system. The Air Deccan website currently states, "Air Deccan had migrated to an upgraded reservation system, on the 27 February 2007. This system aims at offering more efficient and User friendly services to our passengers..."
The company is owned by Deccan Aviation (98.4%) and Investec (1.96%)^[2].

Destinations

Fleet

The Air Deccan fleet consists the following aircraft (as of June 2007) :

★ 24 Airbus A320-232 (plus 58 on order)

★ 3 ATR 42-300

★ 9 ATR 42-500

★ 8 ATR 72-500
The average age of the Air Deccan fleet is 6.1 years as of April 2006.^[3]

Aircraft orders

★ The airline has ordered 30 new ATR 72-500 aircraft (half to be leased), along with 3 secondhand ATR 42-500s and 3 secondhand ATR 72-500s. Deliveries will begin in May 2005 and be spread over a five year period with 6 to 8 aircraft delivered each year. As of June 2005, two of the 30 aircraft have been delivered.

★ On January 3 2006, Air Deccan placed a further order of 30 Airbus A320 aircraft taking their total orders of A320s to 62, to be powered by IAE V2500 engines.

Competitors

Air Deccan's phenomenal growth spurred the entry of more than half a dozen low-cost air carriers in India. Air Deccan faces stiff competition from SpiceJet, Indigo and GoAir. The growth of these low-cost air carriers has also forced mainstream Indian airliners like Indian Airlines, Jet Airways, Kingfisher Airlines, and JetLite (former Air Sahara) to lower their fares. However, there is a lot of scope for the growth of the airline since the Indian air industry continues to remain largely under-penetrated. Moreover frequent delay and cancellation of Air Deccan flights is leading to customers going to other budget airlines.

Revenue

Air Deccan has reported a sizeable net loss for the first reporting period since it became a publicly traded company.
In a statement to the National Stock Exchange of India it reported a net loss of Rs 3.4 billion ($74 million) for the 15-month period between 1 April 2005 and 30 June 2006. It originally hoped to break even in the current financial year but executives are quoted in the local media as saying it now does not expect to post profits until 2008 as a result of intense competition following the launch of several other new airlines. Air Deccan has now turned profitable on the back of a strong Oct-Dec 2006 quarter, posting a profit of Rs. 9.64 crores (a little more than US$ 2 million).^[4]

Air Deccan Acquisition

Kingfisher Airlines parent company United Breweries Group's acquired 26% of Air Deccan parent Deccan Aviation (ATWOnline, June 1), including that the promised offer to acquire an additional 20% of Deccan will be priced at the same INR155 ($3.82) per share. The initial stake cost UBG INR5.46 billion. UBG will be the largest shareholder in Deccan and will nominate three directors to the 12-member board. The combined fleet of 71 A320 family and ATR aircraft will operate 537 flights to 69 Indian cities, "whilst taking advantage of unparalleled synergy benefits arising from a common fleet of aircraft," according to Kingfisher. "For the near future, Kingfisher will continue to serve the corporate and business travel segment while Air Deccan will focus on serving the low-fare segment, but with improved financial prospects for both carriers," Kingfisher said. Speaking to reporters yesterday, UB Group head Vijay Mallya said there were no plans to launch an IPO "at this stage" and that UBG would have no problem funding the acquisition

Controversies

In a recent exposure by CNN-IBN channel, Air Deccan had been accused of delibrate slowdown in check-in and overbooking, of which the latter is a violation of DGCA rules. Low cost airlines are not allowed to overbook since they do not refund the passenger fare nor do they offload the passengers to other airlines. The exposure claims that Air Deccan delibrately slows the check-in process and offloads many passengers with confirmed tickets as no shows.^[5] In response, Air Deccan has denied allegations of deliberate slow check-in and overbooking and admitted that there were minor system errors following an updation of their booking system in 27th February 2007, which have since been rectified. ^[6] They also claim that the reports on CNN-IBN have been "manufactured" to create "sensational journalism" and that their reservation system cannot overbook.^[7]

External links

★ Air Deccan

★ Photographs from Airliners.net

★ CNN-IBN responds to Air Deccan's allegations of sensationalism

References

1. Air Deccan plane catches fire after flag-off
2. Directory: World Airlines
3. Air Deccan Airline fleet Age
4.
5. Air Deccan taking people for ride
6. Air Deccan denies overbooking
7. Air Deccan denies allegations made by CNN-IBN report