NEW DELHI: With Vijay Mallya, who heads Kingfisher airline and UB Group, acquiring 26 per cent stake in budget carrier Air Deccan, the rapidly expanding domestic civil aviation scenario has seen one more step towards consolidation.

After the recent Jet-Sahara deal and merger of the two State-owned carriers, Air India-Indian Airlines, slated to become operational from mid-July, chances are that the impact of the consolidation will be felt in the aviation sector only by this year-end in the shape of new market dynamics and synergies in various areas. JetLite, most likely a budget arm of Jet Airways and the new, merged public sector single-entity Air India will emerge in the aviation market soon.

When Air Deccan launched operations in 2003, fanning out from its routes largely in southern region, it banked upon its low-cost, budget operations, forcing other carriers to take note of its presence as it expanded its fleet of ATRs and Airbus A-320 aircraft and launched its Re. 1 tickets, offering lakhs of seats in the season.

Hordes of first time air travellers, double-income families and holiday makers were only too happy to exercise their option, preferring the more economical and faster mode of travel instead of road or railways. Air Deccan, under the stewardship of Captain G. R. Gopinath, was seen offering simpler and more affordable way of flying to travellers, galloping to a market share of 22 per cent. Competition came but much later in the form of other low-cost, no-frills carriers like SpiceJet and Indigo. Air Deccan had managed to raise about Rs. 400 crore though its initial public offering (IPO) last year and it recorded a net loss of Rs. 213 crore on revenue of about Rs. 438 crore for 2006-07. "Kingfisher-Air Deccan consolidation is a good development for the aviation industry in the country. Since Air Deccan's cash flow appeared to be in a precarious condition, it will give a fresh lease of life to it. We hope Air Deccan will come up with more responsible and predictable marketing moves which will not result in stupid fare-wars in the domestic skies," Siddhant Sharma, CEO of another low-cost carrier, SpiceJet, said.

For the time being, both Kingfisher and Air Deccan will continue with their own respective business models and air passengers can manage to retain their cheer of low-fares and value add-ons for a considerable time to come. For the carriers, alluring new and more air passengers will continue to be an exercise, challenging enough to break conventional market rules. Private airlines can hope for opening of cash-rich Gulf routes by this year-end.

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