The Hindu Business Line : Drop in fares boosts Air Deccan's profits

Its Managing Director, Captain G.R. Gopinath, told Business Line that the trunk route operations on which fares were dropped recently, are proving to be profitable now.

"The decision to drop fares has seen passenger loads on the Airbus flights being 100 per cent on most days and more than 90 per cent on other days. Even before the fares were dropped, the trunk route flights, which are operated with the Airbus aircraft, were reporting passenger loads of about 70-80 per cent and were cash positive for us. But lowering fares has helped us report profits," Capt Gopinath said.

On October 8 this year, Air Deccan decided to slash fares by as much as 20 per cent.

The airline dropped its fares a day after all major domestic airlines announced a 10 per cent hike in inland fares citing several factors, including soaring prices of aviation turbine fuel (ATF).

In keeping with the global trends, however, Air Deccan had also provided for a pre-operative loss in its project report.

"This is something that is done everywhere. Some of the most successful low-cost airlines in the world have provided millions of dollars in their project reports for pre-operative losses due to a variety of reasons, including pilots having to be trained. However, though we provided for it, we did not need it," Capt Gopinath pointed out.

The airline was said to have provided about Rs 10 crore for pre-operative losses.

Capt Gopinath noted that Air Deccan, which reported a profit for the year ended March 31, 2004, is all set to repeat the performance in the current fiscal.

Meanwhile, the airline, which is set to add more sectors to its route network, is awaiting the delivery of an ATR-500 aircraft next month.

The airline top brass held a meeting with a team of ATR officials that included the European aircraft manufacturer's chief executive officer in Bangalore last week.