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Air Deccan in expansion mode
Monday, 20 December 2004, 20:30 IST
MUMBAI: Air Deccan, India's only low-cost airline, has chalked out an ambitious plan to expand its fleet and operations within the country after raising $40 million in private equity from two venture funds.
The Bangalore-based airline has decided to increase its fleet strength from 15 aircraft to 60 in a phased manner over the next five years with a view to enhancing its operations significantly.
Air Deccan also plans to launch business jet services early next year in select cities and set up a simulation centre for training pilots.
"We have entered into agreements with ICICI Venture Funds and US-based Capital International for raising $40 million by placing new shares," said G.R. Gopinath, chief executive officer of Air Deccan.
"The entire fund of $40 million will be used to augment our fleet and connect new routes in the domestic market over the next few years," Gopinath told IANS in an interview.
The official refused to disclose the equity India's ICICI Venture Funds and Capital International would pick up in Air Deccan, saying he had signed a "non-disclosure agreement" with his investors.
Gopinath had earlier said the airline was looking to divest around 25 percent of its stake to raise funds. It had appointed Britain-based N.M. Rotchschild as investment advisor for the first round of funding.
As a result of the fresh fund infusion, Air Deccan's paid up capital will increase from 
300 million ($6.8 million) to 2.15 billion ($48 million).
Gopinath said he would finalise agreements "over the next 8 to 10 days" for acquisition of 30 Airbus 320s and 30 ATRs or smaller aircraft with a seating capacity of 40 to 50 passengers.
"The new aircraft will be acquired through a mix of leasing and buying. We will start getting the delivery of new aircraft in a phased manner starting next year," he said.
"The idea is to have a fleet of 60 aircraft in five years. This will help us add new routes in our network as well as strengthen existing services."
Air Deccan, which started operations in August 2003, currently operates three Airbus 320s and seven 48-seater aircraft. Three more ATRs are likely to be added in the fleet soon.
Gopinath said his company would also launch business jet services from the first quarter of next year in select cities to cater to the growing demand of corporate houses.
"We will acquire 6-to-7-seat aircraft to launch business jet services in New Delhi, Bangalore and Mumbai from March or April next year. The delivery of the aircraft will start soon," he added.
The airline is also scouting for a joint venture partner to set up a simulation facility in Bangalore to train pilots.
Gopinath, a former Indian Army pilot who launched the company for offering charter services initially, said that the airline might float an initial public offering in two to three years.
Gopinath has a 26 percent stake in Air Deccan, Brindavan Beverages holds 20 percent, a non-resident Indian firm 20 percent, a Japanese investor 20 percent and other promoters and high net-worth individuals hold the balance.
Source: IANS
300 million ($6.8 million) to 2.15 billion ($48 million).
Gopinath said he would finalise agreements "over the next 8 to 10 days" for acquisition of 30 Airbus 320s and 30 ATRs or smaller aircraft with a seating capacity of 40 to 50 passengers.
"The new aircraft will be acquired through a mix of leasing and buying. We will start getting the delivery of new aircraft in a phased manner starting next year," he said.
"The idea is to have a fleet of 60 aircraft in five years. This will help us add new routes in our network as well as strengthen existing services."
Air Deccan, which started operations in August 2003, currently operates three Airbus 320s and seven 48-seater aircraft. Three more ATRs are likely to be added in the fleet soon.
Gopinath said his company would also launch business jet services from the first quarter of next year in select cities to cater to the growing demand of corporate houses.
"We will acquire 6-to-7-seat aircraft to launch business jet services in New Delhi, Bangalore and Mumbai from March or April next year. The delivery of the aircraft will start soon," he added.
The airline is also scouting for a joint venture partner to set up a simulation facility in Bangalore to train pilots.
Gopinath, a former Indian Army pilot who launched the company for offering charter services initially, said that the airline might float an initial public offering in two to three years.
Gopinath has a 26 percent stake in Air Deccan, Brindavan Beverages holds 20 percent, a non-resident Indian firm 20 percent, a Japanese investor 20 percent and other promoters and high net-worth individuals hold the balance.
Source: IANS