Low-cost carrier Deccan and Vijay Mallya-led Kingfisher Airlines on Wednesday decided to merge and create a single corporate entity to cut down operational costs and accelerate their journey to profitability.

The boards of the two private airlines at a joint meeting unanimously decided after management consulting firm Accenture in its report recommended their merger for greater operational and marketing synergies.

Details of Deccan-Kingfisher merger, valuations and swap ratio will be worked out by accountancy firm KPMG.

Liquor baron Mallya's UB Group had earlier this year acquired 46 per cent stake in Deccan Aviation Ltd [Get Quote], becoming its single largest shareholder.

Mallya would be the chairman and CEO of the merged entity, while executive chairman of Deccan, Captain G R Gopinath would be the vice-chairman.

UB Holdings held a 46 per cent stake in Deccan prior to the merger decision, and Mallya said the merged entity would be majority-owned by UB Holdings.

Gopinath said Accenture was commissioned to come up with a comprehensive report on what needs to be done to get the operational and marketing synergies, bring down the cost of two airlines and give strategic and tactical inputs.

Mallya said the report highlighted how the two airlines can save a lot of money, bring down the cost of operation and accelerate the route to profitability by merging into a single entity.

"It (Deccan and Kingfisher) will be one company, and eligible to fly (internationally) in 2008," Mallya said.

He said one of the key elements of the Accenture report is route rationalisation between the two airlines.