Monday, January 22, 2018

Air Deccan: Back in the skies

On December 23, 2017, Captain Gorur R Iyengar Gopinath re-entered India’s commercial aviation market, a decade after he had exited from it. With the launch of three flights from Mumbai—to Nashik, Pune and Jalgaon—Gopinath, fondly known as Captain or Gopi, and his airline entity Air Deccan, which made budget air travel in India a reality back in 2003, were back in the game.

Budget airlines or low-cost carriers (LCCs), which charge for traditional services such as food and seat allocation and offer low fares, function on a different revenue model as compared to traditional airlines. In 2003, when Gopinath had launched Air Deccan, there were only four airlines—Jet Airways, Air Sahara (which was bought by the former), Air India and Indian Airlines (the latter two have merged since then)—and all were, and continue to be, traditional full-service airlines. Today, LCCs command a 65 percent share of India’s domestic air passenger traffic.

Amber Dubey, partner and India head of aerospace and defence at KPMG, points out that Captain Gopinath “is the pioneer of the LCC concept in India”. “He provided regional connectivity when the term was not a buzzword,” says Dubey.

It’s a different story though how another budget carrier IndiGo, which launched operations three years after Air Deccan, has become India’s largest and most profitable airline with a 40 percent share of the domestic air passenger traffic while Air Deccan bowed out in 2007. This despite having scaled and achieved over 20 percent market share in four years. The airline was making huge losses and early investors of Air Deccan were pressuring Gopinath for an exit. “Air Deccan succeeded, it did not fail. It sold to [Vijay Mallya’s] Kingfisher [Airlines] because of investor pressure,” says Gopinath, adding, “And everybody who invested made huge returns.”
22/01/18 Anshul Dhamija/Forbes

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