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Air Deccan slaps congestion cess
IT IS a way of showing who calls the shots. Air Deccan, the country’s largest low-cost carrier, in which liquor king Vijay Mallya took 26% stake last week for Rs 550 crore, re-imposed the congestion cess of Rs 150 per passenger from Tuesday.
This is the first in a series of measures the UB chief is likely to introduce in the coming weeks to turn around Air Deccan. “We have decided to focus on making Air Deccan’s operations profitable this year and this may involve taking some hard decisions,” a senior UB Group executive told ET. Imposition of the Rs 150 congestion cess has been on cards, the UB executive added.
Air Deccan had scrapped the cess following objections from the civil aviation ministry. Airlines had imposed the cess last year citing higher fuel burn in major airports owing to congestion in air and on the ground.
Despite civil aviation minister’s displeasure over the levy, most airlines held ground and continue to charge the cess.
Meanwhile, in a top-level appointment, Air Deccan has brought in Anand Ramachandran as vice-president (finance). Mr Ramachandran has over 10 years of industry experience by dint of his stints with Jet Airways and the Reliance Group. Air Deccan’s ex-COO Warwick Brady has joined Indonesia’s Mandala Airlines as managing director and CEO.
Sources in the UB Group said other belt-tightening measures likely to be undertaken by the low-cost carrier to fly out of rising losses include massive rationalization of routes and schedules. To Stan with, an airport service team from Kingfisher is currently working to bring out synergies in the operations of the two carriers, especially in the smaller airports.
Analysts note that Kingfisher is likely to rationalize some Air Deccan flights in the busy trunk routes, which also cause the maximum losses. Both Mr Mallya and Air Deccan chief Capt GR Gopinath earlier indicated there could be a slight increase in fares to enable the low-cost carrier to break even. Air Deccan reported losses worth Rs 213 crore in the first three months of the current calender year.
Talks are currently on with aircraft manufacturers Airbus and ATR for rationalization of the order books of the two airlines. Kingfisher and Air Deccan have together booked over 150-odd aircraft to be delivered over the next five years. Senior executives from the UB Group said Mr Mallya would be spending time with senior Air Deccan management to chalk out its growth and expansion plans towards the end of this month.
Both the carriers anticipate that they would be able to save up to Rs 300 crore annually through synergies arising out of joint operations.
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