Financial Daily from THE HINDU group of publications
Thursday, Aug 26, 2004
Financial Daily from THE HINDU group of publications Thursday, Aug 26, 2004 |
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Airlines Marketing - New Products & Services Air Deccan kicks off flights with Rs 500 fare Our Bureau
The Air Deccan Airbus before its flight to New Delhi at the Bangalore airport on Wednesday. — G.R.N. Somashekar
Bangalore , Aug. 25 INDIA'S first no-frills airline, Air Deccan on Wednesday launched a direct flight from Bangalore to Delhi at fares as low as Rs 500. The Air Deccan's Managing Director, Capt G.R. Gopinath, said the airline has already sold 100 seats at Rs 500 for the inaugural flight on its Airbus A-320. He said the airline will induct 10 more Airbus A-320 aircraft and five more ATRs in a phased manner. Out of 10 aircraft, four are on lease and the rest will be purchased. While three Airbus have already been bought on lease, two more will be inducted in February next year. The remaining will be inducted later. The airline will deploy two A-320s in September to operate from Chennai. Capt Gopinath said some of the ATRs will be based out of Delhi and connect smaller cities in the north. He said there will only be economy class in all its flights. He said 25 per cent of the 180 seats will be available for between Rs 500 and Rs 4,999, 50 per cent of the seats at Rs 5,000 and the balance between Rs 5,001 and Rs 8,000. Booking for these seats will commence 90 days in advance. Passengers will also have the flexibility to change their date of departure by paying the difference between the earlier and new fares. The fares will be dynamic and will depend on demand and supply for any given route and, therefore, an afternoon flight could be cheaper than a morning or evening service. The airline will also have in-house entertainment and sales of merchandise. Revenue will be generated through inflight advertisements, which will help in driving down costs further, Capt Gopinath said. He said passengers can also book tickets through the Internet. Currently, 40 per cent of the bookings are generated from call centres, 40 per cent from travel agents who receive 5 per cent commission and the rest through the Internet. There will be no refunds on cancellations. Savings from distribution costs alone is around 50 per cent, he said. As the aircraft will only have economy class, the airline will be able to offer 22 per cent more seats and as the turnaround time is lesser, the aircraft can fly 30 per cent more. He said maintenance of the aircraft has been given to the suppliers of parts, such as Rolls Royce for engines. The airline expects to post revenues of around $125 million during the current fiscal. It has approached private investors to raise funds for the airline. At a later stage, the airline will float an IPO.
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