MUMBAI: Deccan Aviation Ltd., the company operating the no-frills, low-cost carrier, Air Deccan, proposes to enter the capital market with an initial public offering (IPO) on May 18. The issue will comprise 245.46 lakh equity shares of Rs. 10 each through the 100 per cent book-building route.

The issue closes on May 23 and the price band has been fixed at Rs. 150-175.

The company proposes to raise Rs. 368.19 crore at the lower-end and Rs. 429.55 crore at the higher-end of the price band. The issue will constitute 25 per cent of the fully diluted post-issue paid-up capital of the company.

The company proposes to utilise the funds to set up a training centre in Bangalore, a hangar facility for basic and medium level maintenance checks in Chennai and infrastructure at various airports.

It also proposes to carry out market development initiatives and debt repayment.

Addressing the media here on Thursday, Capt. G. R. Gopinath, Managing Director, Deccan Aviation, said, "We aim to become the largest people carrier in the country.

We are not in the fashion, food or entertainment business but focused on the transport business. We still do not have a hangar of our own and have just received the land for a hangar in Chennai and hope for allotment of land for a hangar in Delhi.''

Market share of 14.2 p.c.

Since inception, the airline has carried 4.1 million passengers and has 29 aircraft with 226 daily scheduled flights to 52 airports. It has achieved a market share of 14.2 per cent, making it the second largest privately owned airline in the country. The airline has in place, orders for delivery of 96 aircraft, which are to be delivered by December 2012.

Warwick Brady, the new Chief Operating Officer, Deccan Aviation, said, "In 2005-06, we carried three million passengers and expect to carry seven million passengers next year. The airline follows a two-aircraft type strategy to effectively serve both highly travelled trunk routes and regional locations.

It started operations in 2003-04 with four aircraft and reported a turnover of Rs. 63 crore. This went up to Rs. 318 crore in the following year and in 2005-06, for the eight-month period ended November 2005, the company reported a turnover of around Rs. 518 crore.

The company hopes to break-even at the net level in the next 18-24 months.

Mr. Brady expects the next year or two to see a lot of activity and a probable shakeout in the low cost carrier segment in India. "Not all the players will survive and no more than two low cost carriers will be left finally.

Regarding pilot shortage, Mr. Gopinath said, "we require around 500 pilots over the next few years considering our expansion plans and they are not in abundant supply.

However, there are hundreds of pilots available around the world and we can get them from abroad.''

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