Air Deccan plans 125 fleet by 2013

New Delhi: India's first budget airline, Air Deccan, will add nearly a hundred planes over the next seven years, building a 125-strong fleet by 2013, a company official said on Friday ahead of a planned public stock offering.

Devesh Desai, Air Deccan's head of finance, said the airline would also add up to new 60 routes in the fiscal year ending March 2007, marking a major expansion from the 85 it already flies.

"We have to do tax planning so we will decide later," Desai said when asked if the airline would own or lease all the new planes.

"It depends ... there are factors like depreciation (to consider)."

The company, whose initial public offer (IPO) opens on May 18, said in its prospectus it had placed firm orders for 96 aircraft: 67 Airbus A320s and 29 ATR turboprops, made by a joint venture between Airbus maker EADS and Finmeccanica.

About 30 per cent of the airline's current routes were profitable, Desai said, adding that it usually takes a year for each to break even. The airline, a unit of Deccan Aviation Ltd, runs 29 planes and added had 30 to 40 new routes between April and November 2005, Desai said, boosting capacity by about 60 per cent.

But it lost 1.17 billion rupees in that period. Desai said the airline would use 1.3 billion rupees from the IPO - in which it hopes to raise about 4.3 billion rupees - to "pre-pay high-cost" loans spread over the next one to four years.

The rest of the money would be used to set up a training centre in Bangalore, build a hangar facility at Chennai for aircraft maintenance and add new infrastructure at airports.

Air Deccan reported a net loss of 352.32 million rupees in fiscal 2005, the company said, on a market share of 14.2 per cent. It operated 226 daily flights and flew 4.1 million people in the year ended March.

The airline has witnessed strong growth since it began operations in 2003 but has had to cope with rising fuel prices and increasing competition from rivals. India's nascent but booming domestic aviation industry carried about 20 million passengers in the first 10 months of fiscal 2006, Air Deccan said quoting official figures.

Analysts expect it to grow up to 25 per cent over the next few years.