Air Deccan may hive off ATR business

Budget carrier Air Deccan, which has the largest network in India covering 60 airports and operating more than 300 flights a day, may hive off its highly profitable ATR Turboprop aircraft operations into a separate company.

The airline operates 23 ATR Turboprop aircraft (40 to 70 seater jets) and 18 bigger Airbus A320 jets.

While the helicopter business is already operating as a separate division (the company has a fleet of 10 helicopters and three fixed-wing aircraft), the regional business (with ATR aircraft) is likely to be spun off into a separate company.

"This is aimed at better operational efficiency and gaining better valuation. The routes operated by ATRs are more profitable as these fly to airports where Air Deccan enjoys monopoly. With an independent company, the ATR division can come out with a separate balance sheet," sources say.

Warwick Brady, chief operations officer, said this was one of the options being looked into. "The ATR division can take care of various regional operations, while Airbus can focus on low fare operations. We are exploring other ways of consolidation too. However, no final decision has been taken in this regard." 

Another Air Deccan executive said it was too premature to comment on the issue as the airline was weighing several possibilities of restructuring.

Company sources said the airline was working out various modalities of tackling the human resources allocation angle also.

"Besides complex human resources and management issues, inventory management and allocation of engineers and pilots are posing a problem in creating a regional business entity," the source said.

While it takes approximately 10 to 12 months for every new route to mature, Air Deccan's ATR routes have turned profitable in three months. The regional airports, that are connected by Air Deccan, also give concession on navigational and landing charges.