Deccan Aviation said on Wednesday that Kingfisher and Deccan will run as two separate brands even when the two airlines are merged.
Capt Gopinath says final decision on merger in 2-3 months
NEW DELHI: Deccan Aviation seems to have a mind of its own on the proposed merger with Kingfisher.
While Kingfisher’s Vijay Mallya has been crying hoarse about effecting a reverse merger with Deccan, the latter’s promoter G R Gopinath said on Wednesday that there were many options under consideration and any decision would have to be ratified by Deccan’s independent board of directors.
“The Deccan board will consider whether the reverse merger or any other option is required. We are going to consider not just the report by Accenture on this, but we have also appointed several consultants on our own to study what will suit us best,” Gopinath said.
A decision on the merger could take another two-three months.
Kingfisher holds a little over 46% stake in Deccan as of now, but for getting permission to fly abroad on Deccan’s entitlement from next year, it has been weighing the merger option.
Deccan has already sought permission for flying overseas from the Ministry of Civil Aviation since it would complete the mandatory five-year domestic operation condition by August 2008.
But Kingfisher cannot fly overseas unless it does so on Deccan’s entitlement which is why it has been talking of merging into Deccan.
But senior Civil Aviation ministry officials are of the opinion that with no clarity on whether the merged entity would be allowed to fly overseas on Deccan’s entitlement, Kingfisher would have to first put in an application for permission.
“Deccan has already sought permission to go abroad and we see no reason why it would not qualify. But Kingfisher has not sought permission as yet; it would need to present a definite financial structure to the Government while seeking permission.
Does acquiring a 51% stake in Deccan make Kingfisher eligible for overseas flights? This still needs to be studied.”
Meanwhile, Gopinath also made it clear that while Deccan would like to raise ticket prices due to the rising fuel costs, there were no plans to convert the carrier into a full- service airline.
“We are and will remain low cost while Kingfisher will continue as a full- service carrier. Both the companies will continue to operate independently.”
Meanwhile, Accenture is studying more than just the merger option between Kingfisher and Deccan. It is evaluating operational, marketing and engineering synergies to lower
costs.
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