Air Deccan Aims To Connect Close To 70 Sectors By 2009

Air Deccan completed two years of operations on August 27, 2005. In this period, the airline connected new destinations, brought down airfare, innovated distribution by launching e-tickets and selling tickets at HPCL pumps and Reliance Web World outlets. Captain G R Gopinath, managing director, Air Deccan, in conversation with Indrani Rajkhowa speaks about the airline’s success story, its future plans and programmes

What percentage of revenue is received from Low Cost Airlines (LCAs) and what is Air Deccan’s share?

Today, LCAs in India have cornered approximately 17 per cent share of the domestic air travel pie. Air Deccan's share in the overall aviation pie is approximately 10.8 per cent. With regards to LCAs, the only other airline that exists is Spicejet and they have few flights.

What are your views on the aviation sector of India?

Aviation in India has great scope. There are many players in the market and there is space for even more. The aviation scenario has definitely changed in the past few years and for the better. Our dream is to make every Indian fly at least once in his/her lifetime.

On what routes does the airline operate and what is the fleet strength?

Our fleet strength is five Airbus A 320's (180 seater) and 14 ATR 42 500's (48 seater) and we operate 120 flights a day. We fly to 35 destinations in India, namely Ahmedabad, Amritsar, Aizawl, Baghdogra, Bangalore, Belgaum, Bhavnagar, Bhopal, Bhubaneshwar, Chennai, Chandigarh, Coimbatore, Delhi, Dehradun, Dibrugarh, Goa, Guwahati, Gwalior, Hubli, Hyderabad, Jabalpur, Jaipur, Jammu, Kanpur, Kolhapur, Kolkata, Lucknow, Madurai, Mangalore, Mumbai, Nasik, Tirupati, Vadodara, Vijayawada and Vizag.

What is the percentage of passengers travelling in AC 2-tier that the airline has managed to convert into clients?

On our Airbus sectors, approximately 40 seats out of 180 are targeted at AC - 2 tier railway travellers. Our ATR sectors are mostly small cities with less air connectivity and therefore all the seats are targeted at railway AC travellers. After sampling and analysis of data we have observed that we have succeeded in drawing approximately 18 - 20 per cent of AC - 2 and 3 tier railway travellers.

What about route and fleet expansion plans?

Currently Air Deccan has 120 flights a day; while in the next five years, there is a plan to have 600 daily flights. By 2009 the airline aims to connect close to 70 sectors vis-à-vis its current 35 sectors. In the current financial year, the target is to grow from 1.4 million passengers (2004-2005) to four million passengers. To strengthen our fleet, we have placed orders for 32 new ATR 72 500's and 30 Airbus A-320's to be delivered over the next five years, adding close to 100 flights every year. A 60,000 sq. ft. engineering base hangar at Chennai and pilot training simulator schools at various locations are also in the offing.

On an average how many passengers do you have on a daily basis? Which is your most profit making route?

Approximately 7,000 passengers fly Air Deccan everyday. Well, with regards to profit making routes, on the ATR Route it is the Delhi - Dehradun route and on the Airbus Route it's the Delhi - Bangalore route.

What is your comment on the lack of airport infrastructure and the effects that it has on business?

Our basic concerns are high fuel cost, overcrowding at the airports, poor infrastructure, improper space utilisation and redundant ATC equipment etc. All these factors affect business to a great extent. Today, we can stimulate demand to get additional aircraft but what if the infrastructure does not improve? What good will the aviation boom be? There are a number of airlines, which have come up today, and there is space for more. But, only those obsessed with cutting costs will be able to sustain and survive.

Any plans to introduce business class in the future?

Air Deccan follows a single class policy. We have all types of people travelling by our airline, the lower middle class as well as the rich. We make no efforts to lure high-end passengers; our target is the ‘smart traveller,’ who values his money.

What was the reason for a sudden marketing campaign through the visual and print media?

What we realised was that we needed to make our product connect with our consumers and being identified as a low cost carrier. We wanted to strengthen the emotional connect, which has a lasting impact. Reaching out to the maximum number of people at a low cost was a challenge. This dual challenge was addressed with our TV commercial. We used niche channels and drove people to the sites and channels with cross promos and advertising. The TV and print advertisements have benefited the company in reaching out to the masses as well as to niche markets across the country. They have also helped in creating brand awareness.

After petrol pumps of HPCL and Reliance Web World outlets for distribution of tickets, you are now trying your hand at SMS. How profitable do you think these alternate distribution channels are? Are you exploring any other mode?

Any mass product has to address two elements-affordability and accessibility. We have designed our product at a low fare. Accessibility with ease and convenience is what we are trying to increase by tying up with various distribution channels. We will keep exploring such channels in the future as well. Our aim is to make everything easier and simpler for the consumers.

Tell us more about the SMS ticketing?

It is a facility through which our consumers can not only book air tickets from anywhere in the world, but also pay for them and reschedule their flights through SMSes. We have recently had a soft launch of this facility in southern India and it should be nationally available by September 2005.

Agents get very less margins from LCAs and customers too are not happy with their services. Why then do you stick to travel agents? You already reduce distribution costs by effectively using the Internet?

We will always go hand-in-hand with the travel agents. They are extremely important to us. They are long-time players in this field and have experience and knowledge, which are unmatched and are therefore very crucial to our business. There still are places where credit cards are not accepted or the Internet has not penetrated; that is where our travel agents help.

In spite of success stories of LCAs in the US and Europe written all over the place, what took India so long to take to the idea?

The regulatory framework in India is not organised. It takes a while to penetrate and set things right. The government till now was not letting private companies to run airlines at such large scales. There were too many entry barriers.

Today, its important to have a committee with like minded and focused people. All interested parties and people should work together with a common goal. Since it is in the larger interest of the economy, bureaucratic hurdles should be dealt with tactfully and an aim to find amicable solutions.