Kingfisher cannot offset route dispersal obligations against Deccan: MCA
19 December 2007
New Delhi: The ministry of civil aviation has turned down the UB Group's request to consider Air Deccan and Kingfisher Airlines as a single entity while reviewing the route dispersal guideline (RDG) obligations on commercially non-viable routes.
The ministry has clarified that while reviewing RDG requirements it would take both the airlines as a single entity only when the two have merged completely.
According to ministry officials, the government has nothing to do with the shareholding pattern of an airline. In this case, UB Group, as the owner of Kingfisher Airlines, may be holding a majority stake in Air Deccan but Air Deccan continues to be a separate entity from Kingfisher. So, the government would consider the ASKM (average seat kilometre) obligations of both the airlines separately till the two are completely merged.
The issue arose last month when the Directorate General of Civil Aviation (DGCA) asked Kingfisher to increase capacity on category IIA routes, such as Lakshadweep and smaller cities in the northeast region.
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,'' 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.
In the past, Kingfisher has bought ASKM from Indian Airlines to set off its obligations.