Will Deccan-Mallya deal kill low-cost travel?

Question

Kingfisher has agreed to pay Rs 550 crore (Rs 5.5 billion) for 26 per cent stake in the budget carrier Air Deccan, promoted by Capt G R Gopinath.

The stake acquisition through preferential allotment would also trigger an open offer of 20 per cent.

With this extra buck in it kitty, will Air Deccan be able to expand its fleet and revamp its services?

Do you think the 'common man' (which happens to be Air Deccan's mascot) will benefit from this deal?

Or is this the beginning of the end of low-cost air travel?

Answer 1

One should not be worried of such deal, there are many reasons for it.
1. Air Deccan was loss making airline, no doubt it was giving a run to other airlines and has been doing a great job for the lower middle class Indians.
2. Ground staff were ill paid, aircraft maintenance remained the most worry some factor. Most of the air crafts as far as my knowledge old and on lease. They take away the chunk of the income.
3. King fisher belongs to a giant group of Mallaya, though he has targeted the creamy population in the initial phase now he too wants to get in to the low cost business.
4. Haveing spread out his wings all over India, I think Mr Mallaya would use the infrastructure build for kingfisher for giving/killing the other low cost operators.
5. As far as my personnel exp. and knowledge Mallaya is todays hero in aviation and would surely lead all class of people .
(The real battle for this sector would be with Spicejet in future)

Answer 2

Timealone will prove the impact of this agreement in low cost air travelo as fas as Air Deccan is concerned. However, there are still other low cost airlines such as Go Air, Spice Jet etc. and if people find Air Deccan is no more the cheapest airline, they can always switch over to other Airlines.

Answer 3

I do not think so. After making a successful entry in the middle-cost airline market, Dr.Mallya is eyeing the low-cost airline market, thus targeting the mass of common Indians who fly air-deccan and other low-cost airlines.

Answer 4

did you listen to the prees confrence after the merger, mallya clearly stated that their will be no immediate price hike or something like that
he will try to reduce the the opretional costs, and exand on the knigfisher routes

loads of other airlines are their like spice jet which i prefer
indigo,go air and many others

Answer 5

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Answer 6

now that air deccan has got more oxigen, the competition will be stiff.