About the Airline Industry:
In December 1912, the first domestic air route was opened between Delhi and Karachi by
The Indian State Air Services (in collaboration with Imperial Airways of the UK). This marked a new beginning in India. Three years later, Tata Sons started a regular airmail service between Karachi and Madras. At that time, there were a few transport companies operating within and also beyond the frontiers of the country, carrying both air cargo and passengers. Some of these were Tata Airlines, Indian National Airways, Air Service of
India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. The Tata
Airlines was converted into a public limited company in the year 1946 and renamed Air
India Limited. In 1948 a joint sector company-Air India International was established by the Government of India and Air India headed by J.R.D. Tata. In 1953, the Parliament passed the Air Corporation Act. Air India International and Indian Airlines Corporation came into formal existence and Air India International was nationalized.
The Indian Aviation sector was liberalized in commence in 1990 with private sector players being allowed to operate as air taxi operators in India. A number of private players commenced domestic operations like Damania, East-West, Modiluft, Air Sahara and NEPC, entered the industry. However, a decade later none of them have survived.
Today the Indian Aviation sector is dotted with new players like Air Deccan, Indian
Airlines, SpiceJet, GoAir, Air Indigo, KingFisher, Jagson Airlines and Jet Air.
Key characteristics of the industry
Limited Air Infrastructure

The airline industry is most sensitive about the cost of aviation turbine fuel (ATF). This contributes to 40-45% of an airline’s operating costs. According to the Federation of
Indian Airlines (FIA), the average domestic price of ATF is 60-70% higher than that at regional aviation hubs in Singapore and Dubai. Even the discounted price of ATF for international operations is 40% higher than prices elsewhere. ATF prices consider not only central duties but also state sales tax.
MRO Facilities - Maintenance, repair and overhaul facilities are lacking in India. Airlines have been dependent on its foreign counterparts’ for such services and as such fly their planes abroad for such services.

About Air Deccan
Air Deccan, the first low cost carrier of India has truly changed the face of Indian Aviation Industry. The airline gave wings to the dream of flying of every common Indian. Promoted by aviation enthusiasts, Capt Gopinath, Capt KJ Samuel and Vishnu Raval, Air Deccan tickets started its journey on 23rd August 2003. The airline has its base in Bangalore with its secondary hub at Meenambakkam International Airport, Chennai.

Find latest promotion code here - Yatra.com Offer - Use promo code BDYATRA to avail Rs 200 discount on domestic air ticket and Rs 1500 on Yatra International tickets

Popularly referred as Common Man’s Airline, Air Deccan is a business unit of Deccan Aviation Ltd, India's largest private helicopter charter company, which broke new grounds to the helicopter tourism in India. With the advent of Air Deccan, air travel is no more restricted to prosperous minority. Every common Indian can now think of flying because of the cheap and affordable airfares offered by Air Deccan. It was the first airline in the history of Indian Aviation industry that offered the fares for just Rs 1 to Rs 500/- and dropped fares when fuel prices increased. The young and versatile fleet of Air Deccan comprises of 20 narrow bodies (Airbus-320) with an average age of 1.5 years and 23 ATR Turboprop aircraft that ensure cost efficient, safe and reliable operations.

Christened as simply fly Deccan airlines with a vibrant Kingfisher logo emblazoned on its aircrafts,AirDeccan’s 26 percent stake has been acquired by the flamboyant kingfisher airlines, owned by liquor baron, Mr Vijay Mallya. To add value to its passengers travel experience, Air Deccan offers services like free travel for infants, greater ticketing flexibility, new airport coaches, plush aircraft interiors, ticketing counters and complimentary water. The tickets for Air Deccan airlines flights can be purchased from anywhere anytime through its comprehensive website that gives the facility to book ticket online through its user-friendly booking engine. Air Deccan was indeed the first airline to have brought the concept of e ticketing in India. The multilingual call center of Air Deccan flight is committed to provide all kind of information related to air booking, cancellation, rescheduling to passengers round the clock.

Connecting every corner of the country, Air Deccan operates regular flights to Delhi, Mumbai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Trivandrum and Chennai. Besides flying to all metropolitans, the airline also flies to many small cities and remote towns that include Kandla, Kolhapur, Tuticorin, Vijayawada, Bellary, Belgaum, Hubli, and Rajahmundry. Deccan Airlines boasts of its largest network in the country that extends from Ahmedabad in the west to Baghdogra in the East and from Delhi in the North to Madurai in the South. It is the first low cost airline in India to fly to second tier cities like Hubli, Madurai and Visakhapatnam from metros like Bangalore and Chennai.

Providing cheap and lowest airfares on various popular sectors, Deccan Airways is the pride possessor of many prestigious awards and accolades such as Galileo Express Travel Award 2006 where it was adjudged as The Best Domestic No Frill Carrier. Air Deccan airlines was also honored with 2007 Frost & Sullivan Company of the Year" award in the area of Indian commercial aviation. Air Deccan fares with its cost efficient strategies and seamless services is focused to provide best and comfortable air travel experience to its leisure as well as business travellers.
About Kingfisher Airlines
Kingfisher Airlines is an airline group based in India. Its head office is The Qube in Andheri (East), Mumbai and Registered Office in UB City,Bangalore. Kingfisher Airlines, through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher Red. The airline has been facing financial issues for many years. Until December 2011, Kingfisher Airlines had the second largest share in India's domestic air travel market. However due to the severe financial crisis faced by the airline, it has the 5th largest market share currently, only above GoAir.
Kingfisher Airlines is one of the only seven airlines awarded 5-star rating by Skytrax along with Cathay Pacific, Qatar Airways, Asiana Airlines, Malaysia Airlines, Singapore Airlines, and Hainan Airlines Kingfisher operates 250 daily flights with regional and long-haul international services. In May 2009, Kingfisher Airlines carried more than 1 million passengers, giving it the highest market share among airlines in India.Kingfisher also owns the Skytraxaward for India's best airline of the year 2011.
Kingfisher Airlines is also the sponsor of F1 racing outfit, Force India, which Vijay Mallya also owns.

About the merger
Kingfisher Airlines and Air Deccan merged into a single corporate entity and became a subsidiary of Vijay Mallya-led UB Holdings. At a joint board meeting of Air Deccan and Kingfisher Airlines in Bangalore, the airlines decided to merge into a single entity, which was later listed as Kingfisher Airlines. Only parts of Kingfisher were merged with Air Deccan.
Mallya was appointed as the chairman and CEO of the merged entity, while G.R. Gopinath became vice-chairman. The companies decided to start overseas flights from August 2008 under the Kingfisher Airlines brand. As per the initial plan, it was decided that the two companies would continue to cater to two different consumer segments. Shares of Vijay Mallya-led United Breweries Holdings and low-cost carrier Deccan Aviation reacted positively to the news that both the companies would create a single corporate entity to cut down operational costs and increase profitability.. AFter the merger, Kingfisher and Deccan together had a market share of about 32 per cent and a fleet size of 80 aircraft (37 of Kingfisher, 43 of Deccan) flying to 70 destinations.
The merger is based on recommendations of Accenture, the global consulting firm. KPMG was asked to do the valuation and the swap ratio was decided accordingly. The merger came through on as Vijay Mallya from Kingfisher airlines bought 26% of the stake in Air
Deccan. The unification of the two carriers had to be sanctioned not only by the two panels, but also by the institutional investors, independent directors, and other shareholders. Air Deccan had four independent directors-which included prominent persons like IIM Prof Thiru Naraya, Tennis player Vijay Amritraj, and A K Ganguly, Former MD Nabisco Malaysia.
Timing of the merger
The international market (both outbound and inbound), at that was though growing at a healthy 17 per cent per annum, but it was already crowded and foreign airlines were fling two-thirds of Indian passengers.
Synergies from the merger
Cost reduction : Kingfiher expected the airlines to save about Rs 300-400 crore (Rs 3-4 billion) annually to accrue because of the synergies achieved due to the merger. They would be stronger vis-a vis lessors, aircraft manufacturers (Airbus in this case), and will also spend less on training and employees.
Costs would also reduce which is associated with maintenance of aircraft. The savings in cost would be lower by about 4-5% (Rs 300 crores).

Revnue enhancement : An increase in revenue expected as the new airline would be operating 600 flights a day.
Geographic reach: Kingfisher got the flexibility to fly international as Deccan had the licence to fky internationally while Kingfisher did not.
Market share : KingFisher would operate as a single largest (private) airline in the sub-continent. Mislanious: Besides, operational synergies (engineering, inventory management and ground handling services, maintenance and overhaul), the management and staff of both the airlines would be integrated.
Value delivered to the consumer :
By devising a more optimal routing strategy it could help in rationalizing the fares.
Huge discounts on all purchases
Dampeners/Risks of the deal
Before the merger Air Deccan recorded a net loss of Rs 213.17 crores on revenue of Rs
437.82 crores for 2006-07. The company had also raised Rs 400 crores through an IPO in
May 2006. Whereas, Kingfisher Airlines has accumulated losses of some Rs 1,200 crore. The merger between Kingfisher Airlines and Deccan Aviation may have created one of the biggest airlines in India, but the new grouping is also among the biggest loss makers in terms of accumulated losses.
High costs environment especially because of the increase in the fuel prices.
Intense competition
No congruence in the target market of both the Airlines. Kingfisher was a full fledged premium airline while Deccan was a low cost carrier. The two airlines had different business models and catered to totally different passenger segments.
Cultural influences too was an major consideration.
Capacity growth may outpace demand
Overseas routes may add to losses
Mobilising large funds will be difficult
Conflicting brands under one umbrella

http://en.wikipedia.org/wiki/Kingfisher_Airlines http://www.deccanairlines.in/ http://www.flykingfisher.com/about-us.aspx http://www.rediff.com/money/2007/dec/21inter2.htm http://www.telegraphindia.com/1071220/jsp/business/story_8690360.jsp
Business Standard, June 3, 2007, p- 4 http://articles.economictimes.indiatimes.com/2007-12-18/news/28414449_1_kingfisher-airlines-kingfisher-deccan-deccan-aviation http://articles.economictimes.indiatimes.com/2007-12-20/news/27678892_1_deccan-aviation-mallya-s-ub-group-united-breweries-holdings http://articles.economictimes.indiatimes.com/2007-12-22/news/27681214_1_kingfisher-airlines-deccan-aviation-ub-holdings http://businesstoday.intoday.in/story/can-this-marriage-work/1/1296.htmls