By Vipin Agnihotri
The merger of Air Deccan into Kingfisher Airlines has given quite a bit of relief to the Indian aviation industry. This is because of the simple reason that after merger Mallya said on record that the days of giving unviable fares to passengers is now gone.
Point to be noted here is that the two airlines have different set of business models. In addition, they cater to totally different passenger segments. According to sources, Kingfisher Airlines is confident that they will be able to tap synergies and make the merger successful.
The main advantage that will come out from this merger is that it will improve the fortunes of other airlines. It is worth mentioning in this regard that when you have financially weak players, there is price dilution. In other words, the weaker players pay more attention to cash generation as compared to profitability, and that have an impact on the overall financial health of the industry.
According to some media reports, Kingfisher Airlines is planning to minimize the number of Airbus A320 planes. Furthermore, Kingfisher’s inaugural flight, Kingfisher Flight 21, will fly between Mumbai and London (Heathrow) on June 1, while Kingfisher Flight 31 will fly between Bangalore and London (Heathrow) on August 1. This will be followed by non-stop services to New York (JFK) and San Francisco in end-2008.
In my opinion, UB Group will save around Rs 250 crore annually as a result of combined operations and higher revenues. Another good thing about this merger is that the combined airline will integrate critical departments such as maintenance, flight operations, cabin crew, airport terminal services and marketing support. According to experts, the advantage of the merger will begin to kick in about seven months from now.
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