Giving affordable wings to Indians

Though despite this, at the moment, the balancesheet is not half as good. Losses made in the last 15 months have eroded half of Air Deccan's networth. Globally, low cost pioneers like Europe's Ryanair have stuck to one kind of aircraft and focused on regional routes, Air Deccan has done the opposite. Add to that, the high infrastructure costs and the lack of secondary airports in India and Deccan's entire low cost model seems clouded.

Fuel makes up 405 of the cost and infrastructure costs are fixed, so there is about 15%-20% margin that could be played around with - by everyone. So, what is Air Deccan's margin that they can make profits out of - especially when they call themselves a low-cost airline.  

He sees, "There is a lot of propaganda here. I don't think people really understand this. You are a low fare airline because you are a low cost airline. The fundamental difference comes in the way we do business. Of course, the leasing costs are same or the finance cost for the aircraft acquisition is same, fuel cost is same, infrastructure is same, salaries are same, maintenance is same."

Air Deccan has been penny pinching - the number of employees per aircraft has reduced from an industry average of 120 to 70. Aircraft utilization has gone up by two hours per day to 11, routes have been rationalized and the cost per seat has gone down by 70 paise to Rs 2.60. But even this hasn't silenced the protests.

Professor, Ohio State University, Nawal Taneja explains, "The desire for growth must be balanced against such things as profitability to the airline and should also be able to satisfy your shareholders. You also have to be able to satisfy your labour."

Air Deccan also operates helicopters, they operate a ATR 42, a ATR 72 and Airbus A320. They also operate to many destinations. Executive Chairman, Centre for Asia-Pacific Aviation, Peter Harbison says, "It really likes to focus on regional routes. It obviously has an edge on its competition. It is at a less competitive market place at the moment even though the passenger numbers are large." Captain Gopinath agrees and says, his regional routes are doing better than the trunk route.

But his critics feel that he's attempting to become a national player too fast. He's adding two  new aircraft every month and he rebuts this with the reasons that he has to build a company that people want to work for. He finds it difficult to find pilots who want to fly regional routes in smaller aircraft because they all want to fly Airbuses and Boeings.

But the airline has to make money to survive and revenues can be made from other sources as well. Captain Gopinath says, "I am just short of about $10-$12 per seat. My average fare for Bangalore-Delhi is about Rs 4,500. Three years ago, Jet Airways and Indian Airlines were selling Bangalore- Delhi fares at Rs 12,000 per seat. Today, I wanted to realize Rs 500-Rs 600 more per seat." 

Ryanair has proved that there is money to be made from everything - food on board, check in luggage, website sales and even airport parking. Air Deccan already earns 9% of its revenues from such ancillary services and hopes to take that to 26% soon.

Former Chairman, Ryanair, Patrick Murphy says, "The secret comes in terms of how you make revenue, how you maximize revenue on board from the passengers you are carrying. But more critically, I think Air Deccan will learn to say how can we make more money from the passengers we carry - not necessarily in terms of the fare they pay but in terms of on- board services or the amenities or the additional products that can be sold to the customers. So, that is part of the secret of the success of Ryanair."