Deccan Aviation's row with aircraft lessors reaches SC

New Delhi: Deccan Aviation has moved the Supreme Court to resolve the dispute with aircraft lessor GECAS Group of Companies over the terms of lease agreement.
After the merger between Deccan Aviation&aposs low-cost airline Air Deccan and Kingfisher Airlines, it was decided to terminate the lease agreements prematurely with lessors to eliminate surplus aircraft and avoid duplication of flights.
A bench headed by Justice D K Jain has admitted the plea by Deccan Aviation (whose low-cost carrier Air Deccan has since been renamed Kingfisher Red after its merger with Kingfisher Airlines) challenging the Karnataka High Court ruling that refused to interfere in the dispute involving commercial activity of Deccan with its aircraft lessors.
Earlier, on Deccan&aposs plea the Karnataka high court had given an exparte order restraining the lessors from repossessing the aircraft. However, the court vacated its stay order on a plea by GE Commercial Aviation Services, a part GECAS group, and dismissed Deccan&aposs petition on the ground that though the lessors had given consent to the merger scheme, it would not take away their rights to repossess the aircraft.
GECAS Group of Companies had invoked the cross default clause and had held up around 4.714 million dollars in the form of cash and letters of credit when only rental amount of 1.643 million dollars was due in respect of four aircraft.
According to Deccan senior counsel F Nariman and Pratap Venugopal, the court which had sanctioned the merger scheme under Section 391 of the Companies Act cannot refuse to decide its dispute with its creditors. Resolution of the dispute was a must for proper working of the merger scheme, they added.
31/05/09 Indopia

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All You Wanted To Know About Gopinath's Deccan 360

Captain GR Gopinath will begin operations of his new venture, Deccan Cargo & Express Logistics Pvt Ltd, on May 18. Gopinath, who has pioneered the low-cast carrier model with Air Deccan, which was acquired by Vijay Mallya's Kingfisher Airlines Ltd, is now trying his hand at express logistics business. VCCircle looks at Gopinath's new venture in detail.
Business Model - An express logistics venture, the company will operate under the brand Deccan 360, and aims to provide end-to-end logistic solutions to corporate customers. Deccan 360 will provide service to various industry verticals – pharmaceuticals, machinery, manufacturing, retail, electronics, textiles, banking, etc.
Differentiating Factor - While other cargo operators provide services to the main metros, Deccan 360 plans to reach out to smaller cities in the country. It plans to reach to 75 cities in India. The company will shorten the time span for cargo delivery by using the aerial route. Gopinath says that warehousing, logistics and transportation comprise around 28% of the total cost of manufacturing in India, which he plans to bring down by 12%.
Fund Raising - The initial investment is $25 million by Gopinath himself. The firm is looking to raise another $30 million and Singapore Cargo, IBM Ventures and Intel Capital are reported to be in the fray. Others like software billionaire Azim Premji and venture capital major NEA have also earlier expressed interest. The venture will need investment of Rs 300-400 crore upon reaching 75 cities.
Operational Model - Deccan 360 will operate on a hub-and -spoke model. This is a system of connections arranged like a chariot wheel, in which all traffic moves along spokes connected to the hub at the center. The hub will be city of Nagpur, located at center of India. The first service is Delhi-Mumbai-Chennai-Hong Kong, and Deccan 360 plans to add Dubai to that.
Deccan 360 has already reached agreements with Delhi, Mumbai and Hyderabad airports for hubs. Jude Fonseka, who has had 21-years of experience with FedEx, has been appointed as CEO of Deccan 360.
Market Size - The domestic express cargo business in India is $500 million. This as compared to China's market of $5 billion with 100 dedicated cargo aircraft. India has only seven cargo aircrafts.
Why his model is Disruptive - Gopinath is bringing his low-cost model to cargo business. Deccan 360 will franchise out the trucking and warehousing operations, cutting its expenditure and helping it scale rapidly.
Fleet - Starting with three Airbus and two ATRs. Plans to expand to five Airbus, four ATRs and a fleet of over 400-500 trucks in a year to connect to interiors of the country.
15/05/09 VCCircle

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Gopinath ready to offload 10% stake in Kingfisher

Mumbai: With no private equity deal expected soon to finance his cargo business, Captain Gopinath, pioneer of low-cost flying in India, is open to the idea of selling his 10% stake in Vijay Mallaya’s Kingfisher Airlines.
“A couple of PE investors have approached us to invest in the cargo business, but I have postponed the process now. We will revisit it a few months later, if the valuation improves,” said Gopinath, chairman and managing director of wholly-owned Deccan Express Logistics (DEL).
The $625-million domestic express cargo market is expected to grow at 20% a year over the next five years. On his willingness to dilute his stake in Kingfisher Airlines, Gopinath said: “It depends on the valuation I get.” At today’s market price, his 10% stake is valued at Rs 51 crore.
Gopinath has already pumped in Rs 125 crore in Deccan Express Logistics and needs to raise an additional Rs 150 crore. The company, branded as Deccan 360, is expected to launch the first dedicated cargo service in India on May 27. It has already inducted an Airbus A-310 and will add two more next month.
16/05/09 Mithun Roy/Economic Times

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I still dream of owning a low-cost air-carrier: Capt Gopinath

Mumbai: Two years after selling his budget carrier, Air Deccan to Vijay Mallya-owned Kingfisher Airlines, its former Chairman Captain G R Gopinath, still harbours a dream to return to the low-cost airline segment which he pioneered in the country.
"It is my dream...the country needs a true low-cost airline," Captain Gopinath told reporters here on Thursday.
The Bangalore-based entrepreneur, who is now the Chairman of Deccan Express Logistics, a cargo airline said that he had the option to buy a 10 per cent equity in any domestic air-carrier, as per his agreement with Kingfisher.
When asked if this meant that he would be soon turning his dream into reality, Gopinath said, "I can't give any time-frame...I don't know." he said.
14/05/09 PTI/Economic Times

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'This will revolutionise India's logistics'

New Delhi: Air Deccan began flying, just one per cent of Indians flew. It was 5 per cent by the time Captain G R Gopinath sold out to liquor baron Vijay Mallya. Which is why people take him seriously when, after a year in hibernation, Gopinath says his new venture, Deccan 360, will revolutionise the logistics business — by next year, he claims he will be able to deliver cargo in a day across 75 cities, completely changing the way in which Indian firms will stock inventory. Excerpts from a conversation with Surajeet Das Gupta:
Isn’t this the wrong time to get into the cargo business given how aviation markets are taking a tumble?
I am starting with three Airbus and two ATRs — this will provide me a capacity which is equivalent to the total cargo capacity available from India, capacity that was built in the last 60 years. There are seven dedicated cargo aircraft which have just 120 tonnes of capacity for the entire country — run by companies like Blue Dart and DHL — and this is given to corporate India only when there is some surplus capacity left. I will be the first Indian international cargo company. We have 7 cargo aircraft while China has over 100 dedicated cargo aircraft; the domestic express cargo business in India is only $500 million as compared to $5 billion in China and $35 billion in Europe. So the potential is huge.
But you need to build the market. When I started Deccan just after September 11, when only one per cent of Indians travelled by air, it looked suicidal. But today 4.5 per cent to 5 per cent of Indians fly. By next year, I will be in 75 cities across the country with Nagpur as my hub and I will provide end-to-end logistics support to my customers By that time, I should have nine aircraft — five Airbus and four ATRs — a fleet of over 400-500 trucks connecting the hinterland of our country and warehouses in various locations.
What is your USP? Isn’t delivering goods in smaller cities a harrowing experience?
I will offer delivery deadlines for goods which will be based on service agreements. Today, if I want to sent cargo from Manchester to a small town in south India, it can take around 20 days — I will do it in one day. The flight will come to Nagpur from the UK, from were I can send it to any place in the south either by truck or by aircraft the next day. I should be able to deliver cargo from Bagdogra to Tuticorn in one day via the Nagpur hub. The existing cargo services which are connecting India to the world are not looking at connecting to the smaller cities. Blue Dart operates from only seven cities and it gives the cargo to someone else to deliver if it is not in these cities.
15/05/09 Surajeet Das Gupta/Business Standard

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Deccan's cargo airline is here

New Delhi: In a first by an Indian firm, Deccan Aviation chief Capt GR Gopinath today announced the launch of Deccan Express Logistics, an air cargo and express logistic service on domestic and international routes.
The first service would cover New Delhi, Mumbai, Chennai, Hong Kong and Dubai sectors, Gopinath said. These account for 85 per cent of India’s $1 billion cargo business. Gopinath said this business was growing 20 per cent per annum.
Launched at an initial investment of Rs 1,000 crore, Deccan Express Logistics, under the brand name “Deccan 360,” would look to raise another Rs 1,500 crore in the next few months by divesting equity, Gopinath said on the sidelines of a press conference here today. Maintaining that Deccan 360 would provide domestic connectivity to cargo services, he said, “At present, foreign freight carriers are operating, but they are allowed only to bring cargo from outside the country but not within the country. We are looking at that market.”
Deccan 360 would be the first Indian company to build a hub-and-spoke model in the cargo industry and would ensure clock-work precision in operations, Gopinath said, pointing out that while the United States had over 200 freighter aircraft, India had just six.
Deccan 360 would operate with three Airbus A310 freighters, with a carrying capacity of 35 tonnes, and six small feeder ATR 42 aircraft.
The company has already inducted an Airbus A-310. Two more will be added early next month.
Deccan Express Logistics has also signed an agreement with infrastructure development firm GMR group for setting up express cargo operating facilities at Delhi and Hyderabad airports.
09/05/09 Business Standard

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Deccan Cargo Looking at Stake Sale

New Delhi: Deccan Cargo & Express Logistics Pvt. Ltd. is looking to sell as much as a 25% stake to fund its day-to-day operations, the newly launched company's founder, G. R. Gopinath, said Friday.
Deccan Cargo is scheduled to start air-cargo operations May 27 under the brand Deccan 360, connecting New Delhi, Mumbai, Chennai, Hong Kong and Dubai.
"The company is right now 100% mine and I have invested $25 million in it," Mr. Gopinath told reporters at a news conference to formally launch the company.
Mr. Gopinath - who also founded India's first budget airline, Air Deccan - said he will sell the stake only when "the market improves and valuations are higher." The company will likely need about $30 million in the next six months as working capital, he said, but declined to say whether he was talking to any investors.
Deccan 360 will use nine leased aircraft - three Airbus A310 freighters and six smaller turboprop planes made by Avions de Transport Regional, or ATR. It also plans to establish a warehousing hub in the central Indian city of Nagpur, set up collection warehouses across the country and deploy its own trucks.
08/05/09 Nitin Luthra/The Wall Street Journal

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Deccan Express targets $70 mn topline in first year

Chennai/ Bangalore: Deccan Express Logistics, the cargo venture being launched by G R Gopinath, is targetting a topline of $70 million in the first year of its operations. The operations, being commercially launched on May 18 with an Airbus A-310 freighter on the Hong Kong - Delhi - Mumbai - Chennai route, will be tightly coupled with ground logistics.
A spokesperson for the company said that while the launch will be on May 8th in New Delhi, the commercial launch will be on May 18th. “We have got one aircraft and we should be gradually adding on a couple of more aircraft in the ensuing months,” the spokesperson added.
The company over a two-year period is expected to operate 11 aircrafts.
Deccan Cargo will be pitching itself against established players like Blue Dart, Gati, TNT Express and First Flight in India’s domestic cargo and logistics market. “This market is witnessing rapid growth and if Deccan Express proves its potential, it might pose a stiff competition to established players in three years time,” an industry analyst detailed.
Deccan Express will be Gopinath’s third major venture after charter aviation and commercial domestic ventures. Gopinath sold the commercial aviation business Deccan Aviation to Vijay Mallya’s Kingfisher Airlines nearly two years ago.
According to Deccan Express, the Indian domestic express market is at a very early stage of its development.
Sources close to Deccan Express further indicates that the company is close to tying up $55 million funding from three players - Singapore Cargo, IBM Ventures and Intel Capital to kickstart the venture while Gopinath himself through Deccan Ventures is understood to be pitching in with another $25 million.
Industry sources indicate that Intel Capital has shown a definitive interest in investing $25 million in this venture. In addition to Intel Capital, IBM Venture Capital which traditionally does not take equity exposures is understood to have shown interest in a small equity exposure to the tune of around $3 million in this venture which will riding heavily on technology adoption.
04/05/09 Raghuvir Badrinath/Business Standard

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