Market share seen at 25-26% by FY07-end: Air Deccan

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Market share seen at 25-26% by FY07-end: Air Deccan

MD of Deccan Aviation, GR Gopinath says, average load factor at 75%, Margins will be better going forward but for 6-9 months they will be impacted. Margins to remain subdued for 6-9 months. Will take 9-12 months to become profitable and market share seen at 25-26% By FY07-end.

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Q: What does all this mean for the margins of your company both the price hikes and fall in ATF prices?

A: It should look good. Air Deccan is going to a lot of sectors where nobody is going, places like Dehra Dun, Belgaum, Hubli and Kolhapur, we are very focused on the other India. We always felt that the only way to grow this market is not to just cannibalized the existing routes, you must tap the potential in this vast country of 450 cities, which have airports, but no connections.

But what has happened is that in some of the existing route like Mumbai-Delhi, we are just probably accounting for till Air Deccan came, it was almost accounting for 60% of the nation's revenue, which is a shame. You can build a Mumbai-Delhi economy, 60% of the nation's revenues is just coming from two cities.

So we need to tap the other segments and other states. They have all grown in wealth in the wake of reforms. I think, right now, the kind of problems that you are finding is because of this little bit of excess capacities trunk route. But this will stabilise and it will be good for this sector as a whole. It will be good for Air Deccan, margins will be better and we have to go through for six to nine months.

Q: What sorts of yield then load factors do you have both for the metros that you just pointed out and the other segments that you have gotten into?

A: We are averaging about 75% because every month we are adding new sectors so when you had a new sector it takes 6-9 months to breakeven. So it brings down the average load factor but we have got lots of sectors where we are doing 100% occupancy - sectors like Dehra Dun, Kandla, some of new sectors where there is lot of pent up demand and there was straining for connectivity.

So whenever you open a new sector like Ahmedabad-Coimbatore, which we have opened now, or Hyderabad-Coimbatore, it takes some time to build up so when we add excess capacity, it brings on the average load factor. Right now, we are averaging about 75% across our 300 flights a day. We are going to 60 airports, we are averaging 75-78%. But in the peak season, we are generally averaging about 90-95%.

Q: You have to invest in your business but investors like to see some visible profits. When do you think they can start seeing profits from your business?

A: I think it's not correct on my part to make any kind of projections. Being an entrepreneur, it is my job to focus on the business and concentrate on making profits and deliver value for all the stakeholders. Probably, it should take another 9 to 12 months.

Q: Are you sure that's the timeframe -  9-12 months - that you will be declaring or announcing profitability?

A: I don't think you can ever be sure with these things. But I am sure it will be in our big shot and I am hopeful it should happen.

Q: How much market share do you aim for Air Deccan to achieve in next financial year?

A: By the end of this financial year, we will have about 25-26% market share. We are already at about 21.8% market share. This month, we deployed 5 aircrafts, 1 ATR and 4 Airbus. We have added 25% more seats.

We were selling about 25,000 seats, now we are selling close to 25,000 seats everyday, which is a huge capacity that we have added and the gap between us and Indian airlines will only widen as far as market share is concerned. We should be garnering little above the 25% mark by the end of this financial year.