Mumbai: Vijay Mallya, the billionaire entrepreneur running the United Breweries group, whose flagship company bought a stake in Deccan Aviation Ltd, expects to turn the budget carrier profitable by raising fares by an average Rs500 each and sharing some functions with his Kingfisher Airlines Ltd.
Mallya said Deccan ticket prices would rise by an average of Rs500 each and the “process is already being implemented” on a step-by-step basis across the 27,000 tickets the low-cost airline offers daily. The fare increase will be in addition to a Rs150 “congestion charge” levy that Deccan brought back last week after withdrawing it in March.
Most Indian carriers have a congestion charge on passenger tickets to recover costs of hovering over crowded New Delhi and Mumbai airports while awaiting clearance to land.
Mallya expects Deccan, which posted Rs213 crore in losses for the three months ended 31 March, to report profits in the fiscal year that began 1 April. Losses will also be stemmed as Kingfisher Airlines, which takes its name with the brand of beer that Mallya’s company sells, begins sharing some functions with Deccan.
Mallya’s United Breweries Holdings Ltd bought 26% of Deccan for Rs550 crore on 31 May and has offered to purchase an additional 20% in line with regulatory norms. United Breweries acquired the stake to reduce aircraft and maintenance costs as both fly Airbus SAS and Avions de Transport Regional planes.
The Deccan stake purchase will generate savings of Rs300 crore in the first year itself, the acquirer had said earlier this month.
Air Deccan, as the carrier is known, filled 85% of seats last month, compared with 82% a year earlier. Passenger numbers rose 32% to 704,043. The airline now has 350 daily flights to 65 destinations in India. Kingfisher, which is the only Indian customer for the Airbus SAS A380, plans to order five more of the superjumbos, said two people with direct knowledge of the matter who did not want to be named.
Tarun Shukla of Mint contributed to this story.