If it is any sign of the shape of things to come, there wasn’t a hint of blue and yellow (colours of Air Deccan) at the joint press conference that Vijay Mallya and G.R. Gopinath held at Hilton Towers in Mumbai on 1 June. Several hours after the conference, in an adjoining room awash with the colours, sight and sounds of Kingfisher Airlines, Mallya spoke to BW’s Anjuli Bhargava about the deal and its implications. Excerpts:

Is this the quickest deal you’ve done?
If you judge it by how long Whyte & Mackay took, it was a deal done with lightning speed. But from the time that Captain Gopinath agreed to move forward to the time we actually closed the deal, yes, clearly it was done in 72 hours. It must be the quickest deal I have ever done.

Who approached whom?
I approached him. I have been approaching him for a while. I first approached him a long time ago. But he finally agreed to go with me at 4.45 a.m. on Tuesday.

Meaning the Anil Ambani (Reliance ADAG) deal was still on the table?
I believe so. I absolutely believe so.

What was Gopinath initially reluctant?
He perceived it as my wanting to buy 100 per cent of Air Deccan as a prelude to merging it into Kingfisher and was worried that Deccan would disappear. He’s built his company with passion, so naturally he was reluctant.

Why do you think Texas Pacific Group didn’t invest?
I think they made a mistake. They can still invest in the Kingfisher-Air Deccan group and make a lot of money.

Why did you pick Air Deccan?
Air Deccan was very logical for us. The same Airbus fleet, same engines, same brakes, same ATRs, same avionics, same rotables, same maintenance with Lufthansa Technik. It couldn’t be better. It fits like a glove. As far as Jet was concerned, it’s all very well to say that both have B737s, but Jet has B737-800 and B737-900 and Sahara has B737-300 and B737-400. So, that’s not the same as this. Here, we have exactly the same aircraft. Plus, Air Deccan has mostly brand new planes as does Kingfisher.

We will be the single largest airline group in India much like the KLM-Air France combination or the Qantas-JetStar combination and we will have the power that goes with market leadership. We will have 537 flights a day, connecting 69 destinations and can offer seamless connectivity with all these destinations.

I thought you didn’t believe in the low-cost model…
Yes, you’re very right. I still don’t believe in the low-cost model because there is nothing low cost about operating an airline in India. What I don’t believe in is the low-fare model and the high costs associated with operating in India. But two things are happening here. With the synergy between Deccan and Kingfisher, a lot of our joint costs will come down dramatically. So, we can offer the cheapest fares to the most expensive fares. That’s what will make us really competitive in the market. Whatever you want, we can offer. So, it’s not about whether I believe in a theory or a particular kind of model. I am only interested in the balance sheet and in the profit and loss account. Two, this will consolidate the industry, which will end this bloodbath of fares, which is due to the overcapacity in the market. I think it’s better for everyone. They should all be very happy with Gopinath and me for doing this deal. Maybe they should even get together and pay us a little bit!

What do executive chairman and vice-chairman mean? How do you see your roles in the company?
The more significant issue to answer your question is that the person who will operate Air Deccan is the chief operating officer. He will report to the board of directors, not to any individual. Captain Gopinath is executive chairman because he needs to draw compensation and salary, and so he can’t be a non-executive chairman. And I agreed — for the first time, I must admit – to be vice-chairman as I have no hang-ups. We can work together. I don’t think we should be too fussed about titles and designations.

So, he won’t run it hands on as he did till now?
By his own admission, there is going to be a professional CEO, who will function on the directives of the board and the advice that is given to him.

That means there will be a change in the way Air Deccan is run since he was running it all this while?
Yes, I guess so. Absolutely. You know, one has growing pains. Kingfisher grew very rapidly but we, as I said, had planned well in advance, hired people in advance and started with a paid-up capital of Rs 450 crore. Deccan also grew equally rapidly and had some growing pains, teething problems. You can’t blame them for it.

How many people will Kingfisher lend to Deccan?
As many as required. If I am deploying myself, that says it all. We will have an integration team with members from both who drive the synergies — which we estimate at Rs 300 crore in the first year itself — without any delay.

Do you plan to IPO and merge the two at some stage?
Kingfisher is not dependent on an IPO as we are well funded. If you want to take a difference between the two, Deccan had a paid-up capital of Rs 100 crore, which will now be Rs 140 crore. Kingfisher started with a paid-up capital of Rs 450 crore  So, we saw it well in advance and provided funds for it.
My reluctance to hand out Kingfisher Airlines shares to private investors or through an IPO is because I want full value. I believe that with the Deccan deal and the synergies that will flow, Kingfisher will become more valuable. Later, I will decide whether to list it via Deccan or separately.