Sharp focus on cost helps Paramount break even

Mumbai: Privately-held Paramount Airways, promoted by Madurai-based textile major Paramount Group, claims to be the first among new airlines to break even.
"We have been running on operating profit for the last 7-8 months," Paramount Airways CEO M Thiagarajan told Business Standard on Thursday.
Indian carriers together have lost $700 million (Rs 2,800 crore) in 2007-08, according to a report from the Centre for Asia-Pacific Aviation (CAPA). They have estimated to have lost close to $1.2 billion in the last two financial years.
Paramount said its business model, slower expansion than others, and a sharp focus on costs helped it break even. When LCCs (low-cost carriers) were the buzzword, Paramount went for a full-service, business class airline.
Paramount adopted the 70-seater Embraer planes, which are fuel efficient and require less maintenance, while others went for bigger, 180-seater planes. So, its break even levels are much lower (its flight can break even with an occupancy of 40-45 seats).
"Unlike others, we didn't spread ourselves thin and restricted our operations to one region, which has optimised the infrastructure cost," said Thiagarajan. So, instead of one or two flights operating out of an airport, it has six or more. If the number of flights an airport services is more, it brings down the cost per flight.
With focus on a single region, Paramount has been able to manage its media costs better. "Advertising is restricted to one region without any spill. It makes a huge difference in costs," said Thiagarajan.
19/02/08 Ranju Sarkar/Business Standard

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Categories: Paramount Airways feb 2008