UDAN scheme: Air Deccan, Air Odisha tie up with Adani kin's GSEC Aviation

Operators, investors join hands to build a consortium for offering low-cost flights

Air service operators Air Deccan and Air Odisha have joined hands with Gujarat-based cargo operator and investors Gujarat State Export Corporation (GSEC) Ltd. and Monarch Group for catering to routes under round one of Ude Desh Ka Aam Nagrik (UDAN) scheme.

Dismissing speculations of a buyout, Capt G R Gopinath of Air Deccan said, "This is a partnership between Air Odisha, Air Deccan, GSEC and Monarch. We cannot disclose the investment or the shareholding structure because it is still being worked. Each of us have our strengths such as Air Odisha's huge network. GSEC and Monarch as investors and Air Deccan's experience in this space. We have come together and created a joint venture between us to grow this infrastructure to link metros to rural towns under UDAN."

While Air Odisha has bagged 50 routes and Air Deccan 34 routes of the total 124 routes being opened up under UDAN by the Government of India, Gopinath said that the JV will help the players optimise their resources.

"One company with a given number of aircraft is not sufficient for scale and optimisation of resources. We found that each of the company was small in terms of operations and maintenance. So there is a coming together since this also needed investments. They are making 62 airports. This requires huge engineering, infrastructure and manpower," said Gopinath while adding that there were other partners in the JV whose names could not be disclosed.

While Monarch has been in the business of financial and capital market advisory, GSEC Ltd. run by Adani Group Chairman Gautam Adani's brother-in-law Rakesh Ramanlal Shah, is into air cargo services. Rakesh Shah is married to Gautam Adani's sister Prity.

In the final stages of structuring, the joint venture will see cross purchase of stakes by the players, details of which Gopinath refused to divulge. "Letter of Intents (LoIs) have been signed. We will have some arrangements of managing the operations though the companies are still independent," he said.

In the next 4-5 months, Air Deccan and Air Odisha are looking to deploy 13 aircraft between them linking 60 airports across the country. While Air Deccan recently launched services in Maharashtra, Air Odisha announced its maiden flight service in Gujarat under UDAN between Ahmedabad and Mundra.

Under the UDAN scheme, Air Odisha has bagged 50 routes to operate where it will introduce its flight services from Ahmedabad to Bhavnagar, Jamnagar, Diu and Mundra in the first phase. Air Deccan, on the other hand, has bagged 34 routes, said Gopinath while adding that the players will be looking at an aircraft utilisation of 10 hours.

Meanwhile, through the JV, Air Odisha will now connect towns like Bhubaneshwar, Utkela, Raipur, Ranchi, Gwalior, Lucknow, Kanpur, Varanasi, Ahmedabad, Surat, Bhavnagar, Salem, Pondicherry, Neyveli, Kadapa, Jharsuguda, Jagdalpur, Vishakhapatnam, and Raigarh, among others.