The first news that I read in the paper today was that Kingfisher has taken over Air Deccan. Air Deccan was trying to raise capital for some time and for it, the budget carrier was ready to offer 22% equity in the airlines, which would have been more than what Captain Gopinath—the man who launched this airline and the concept of budget carrier has in the airline.
It was rumored that Kingfisher was keen to take over Air Deccan but Capt. Gopinath reacted angrily to it saying that how can Kingfisher take over Air Deccan as it is bigger than the Kingfisher. I guess what he ignored was the fact that Kingfisher is a part of United Breweries who has business interest in a lot more things other than the airlines. How can anyone forget that Vijay Mallya is planning to buy 5 Airbus 380? Money should not have been a problem for Kingfisher.
Grabbed The low cost carrier is now 26% owned by Kingfisher.
It is reported that UB has picked up 26% stake in Air Deccan by paying Rs.550 crores at a price of Rs.155 per share. Kingfisher has about 29% of market share and Air Deccan has about 22%. Combines they will have a big pie of the sky. Vijay Mallya has said that he would like to buy out additional 20% stake in the company too.
There have been quite a few airlines that have come up in India in the recent times and the competition between them meant that people were able to fly cheaper. 6 airlines have merged to make 3. Air India and Indian Airlines has merged, Jet Airways has bought Sahara Air and now Dr. Vijay Mallya and Capt. Gopinath have deiced to bury the hatchet and join hands. According to the report in the paper, Capt Gopinath will remain to be the Chairman and Vijay Mallya will be Vice Chairman.
There is a stark contrast in the two airlines. Air Deccan is a no nonsense budget carries that focuses on getting the flyer from point A to B at as low expense as possible while Kingfisher lures the customers who want to "fly the good time". I am wondering what will be the future plans for Air Deccan. I am sure that at least for now Vijay Mallya would want to run it as a budget carrier because that way he can cater to people of both groups.
After the three big airlines, the other budget carriers are suddenly started looking so small. Spicejet, Go Air and Indigo now almost seem insignificant in comparison to these airlines that have merged. Maybe very soon there will be more mergers and acquisitions that would further reduce the number of airlines and will increase the size of the remaining players. With less competition, the fares are bound to go up and that would mean the difference between full service and budget airlnes will get even narrower.
Add to any service | del.icio.us |
