Mallya: Kingfisher-Deccan merger a seminal event for Indian industry

Dr Vijay Mallya, Chairman and

CEO of Kingfisher Airlines and CAPA's Aviation Executive of the Year, explained

the importance of his acquisition of low cost carrier, Air Deccan, to the Indian

airline sector in the Outlook Summit's Keynote address.

Interim results show that the synergies between his carrier and Deccan have resulted in cost performance improvements that have defied popular predictions. Dr Mallya stated, however, that the biggest winner from the deal will prove to be the national airline industry.

Before the arrival of Deccan on the scene, he explained, the prevailing fare from Bangalore to Delhi, a route operated by three carriers, was INR12,000. With Deccan's emergence and the impact it had on prices, the average ticket cost only INR2,500. This, he explained, may have stimulated the market and generated a lot of excitement, but it also created "a lot of balance sheets splashed all over with red ink."

With the combining of forces, which the charismatic CEO says will allow him to offer "both the lowest fares in the market, as well as the highest", there are now three major groupings – Air Deccan/Kingfisher, Air India/Indian and Jet Airways/Sahara. Because these three groups control 83% of the domestic market, there will be a return to sustainable pricing and operations.

"I think everyone has had about enough," he says. "We are not looking to operate as cartels or exploit consumers, but we do want to make some money and insert some sanity into the industry. In a few years, I think we will see preserved business [low cost and full-service] models, but a vastly improved bottom line."

Aviation Outlook Summit 2008 is the fourth meeting of the Centre's annual review of the Asia Pacific and Middle East airline industry and its future prospects. This year's gathering is focused on the need for Asian industry participants to play a leadership role in the events that continue to shape the global aviation sector, especially as the region begins to generate the largest share of world traffic.

Aviation leaders from all segments of the industry have assembled in Singapore to discuss and debate how the regional sector can proactively assert itself in such vital fields as the environment, liberalisation and the necessary evolution of the aviation business model, for both full-service and low cost airlines.

The event's organiser, the Sydney-based Centre for Asia Pacific Aviation, is the region's leading independent air transport research and analysis group. With offices in New Delhi, Singapore, Geneva, Vancouver and the UK, the Centre is the consensus authority on matters related to all elements of Asia Pacific airlines and airports.

For information on Centre products and services, visit the web site at centreforaviation.com.