No route dispersal breather for UB-Deccan

NEW DELHI: The government has turned down the UB Group’s request to consider Air Deccan and Kingfisher Airlines as single entity while reviewing the route dispersal guideline (RDG) obligations on commercially non-viable routes.

The civil aviation ministry has clarified that it would take both the airlines as single entity while reviewing the RDG requirements only when the two are merged completely.

“We have to do nothing with the shareholding pattern of an airline. UB Group, the owner of Kingfisher Airlines, may be holding majority stake in Air Deccan but still Air Deccan is a separate entity from Kingfisher. And hence, we would consider the ASKM (average seat kilometre) obligations of both the airlines separately till the two are completely merged,” a civil aviation ministry official said.

The directorate general of civil aviation (DGCA) had last month asked Kingfisher to increase capacity on category IIA routes such as Lakshadweep and smaller cities in the north-east region.

It is possible for the UB Group to set off Kingfisher’s obligation against the services operated by Air Deccan on non-viable routes. In the past, the airline has bought ASKM from Indian Airlines to set off its obligations. The benefit to Kingfisher in being considered together with Air Deccan is the lower incidence of obligations.

The DGCA, on its part, found Kingfisher’s request unacceptable purely on technical grounds.While Kingfisher would make more losses by utilising larger planes on unviable routes, deployment of Air Deccan’s small planes would reduce the losses on these routes.

UB Group chief Vijay Mallya had, early this month, written to the civil aviation ministry to treat the ASKM obligations of Kingfisher and Air Deccan together. “The UB Group is now the controlling shareholder in both Kingfisher Airlines and Deccan Aviation. The process of integration both legally and operationally is in the progress. However, in terms of image, both airlines initiated visual commonality,” Mr Mallya said in the letter.

As Air Deccan’s capacity deployment is one of the highest among other airlines, Kingfisher would have to deploy less capacity on commercially unviable routes if both the airlines’ ASKM obligations are taken together.