Deccan plans to reposition itself as value carrier soon

Deccan plans to reposition itself as value carrier soon

Mumbai: Marking a strategic shift from its no frills business model, Deccan Aviation Ltd, which operates India’s largest low-fare airline, is planning to reposition itself as value carrier—a place between full service carrier (that offers food on board and other services) and low-cost carrier. It will soon offer light food and refreshments on board.

A formal announcement on its value carrier status will be made at the 12th annual general meeting of Deccan on 19 December in Bangalore. Deccan will be positioned along the lines of JetLite (formerly Air Sahara), a wholly-owned subsidiary of full service carrier Jet Airways India Ltd.

In May, United Breweries (Holdings) Ltd, promoted by Vijay Mallya, who also owns full service carrier Kingfisher Airlines, had picked up a 26% stake in Deccan Aviation. Since, it has been increased to 46%. Post acquisition, UB Group rebranded Deccan as Simplifly Deccan and introduced red and white colours with the Kingfisher bird logo at every passenger touch point including the aircraft, website, passenger coaches, ticketing counters and uniforms for ground and cabin crew.

Besides Deccan, IndiGo, SpiceJet and GoAir are low-fare carriers. Apart from JetLite, state-run carrier Air India also has a value carrier, Air India Express, which offers light refreshments for passengers.

Despite the imminent announcement, Ramki Sundaram, officiating CEO of Deccan Aviation, denied there were any such plans. “The brand of Kingfisher Airlines is based on delight of flying. Therefore, we are evaluating the proposal to offer light refreshments to even Deccan passengers. The proposed frills would not be more than what we offer in Kingfisher Airlines, but will not be below the standards," said a senior Kingfisher executive, requesting anonymity. Another Kingfisher Airlines executive said Deccan plans to retain its all-economy class configuration.

One industry analyst concluded that it would typically cost an airline about Rs70 per passenger to offer light refreshments, but introducing free food would allow the airline to hike ticket prices from Rs300 to Rs400 a passenger.

“This effort to position as value carrier is to differentiate from other low-fare carriers and to claim at least 20% more fare than existing low-fare airlines," said this analyst who didn’t want to be identified as he is not allowed to be quoted by his firm. The business model of Deccan, started by G.R. Gopinath, was based on features such as no food on board, all-economy class configuration, more seats, high aircraft utilization and low-operating cost via outsourcing.