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of the U.K. That followed a $97.6 million lossin the first quarter.“We are still not in operating profit, butwe produced a net profit [in the Decemberquarter] because the losses came down andwe had that other income which allowed us toget into net profit. Actually, in December, wewere in operating profit,” said Gopinath.Fierce price discounting as a resultof overcapacity is one issue affectingprofitability. “Twelve years ago a Bangalore-Delhi ticket was 12,000 rupees ($272.67).Today, if I sell it at 4,900 rupees at 80%occupancy, I am in profit. But I’m not getting4,900. I’m getting 300 or 400 rupees less. I’mjust short of my break-even and that is whatis causing the problem,” he said.Gopinath, however, is convinced AirDeccan has a huge advantage through thecountry’s largest route network, its largestdistribution network and, most importantly,the lowest costs per seat kilometre in theindustry.T he c a r r ie r r e c e ntly ove r t o okgovernment-owned Indian to take secondplace in terms of domestic market share.Jet Airways is the leader. But Air Deccanflies to 60 airports compared to Jet’s 46 andIndian’s 43.Meanwhile, its call centre, set up fouryears ago, now handles 20,000 calls a day.“We are the largest e-commerce site in the‘The Air Deccan strategy andvision is that every Indian mustfly. We must tap the energy andthe resource of the other Indiaand not just Mumbai-Delhi’G.R. Gopinathcountry, grossing $1.5 to $2 million everyday by Internet. We have 7,000 points ofsale, 1,200 IATA travel agents and 4,500non-IATA points of sale,” said Gopinath.These outlets make up part of AirDeccan’s unique approach, reaching millionsof rural Indians by selling tickets throughlocal shopkeepers such as butchers, bakersand greengrocers.“The Air Deccan strategy and vision isthat every Indian must fly,” he said. “We musttap the energy and the resource of the otherIndia and not just Mumbai-Delhi. You needto enlarge the market.“We are in the forefront of creating thatconsumer shift by going to these smalltowns, opening them up and integratingthem with the large metros. That is the onlyway forward, not only for Air Deccan, butalso for the country in terms of generatingequitable economic growth.”Gopinath is now considering the sale ofa 10%-15% stake in Air Deccan, a movethat could raise up to $100 million to fundexpansion. Large industrial houses in Indiaand strategic investors from overseas havelong been sitting on the sidelines of theairline industry “waiting and watching,wondering if LCCs would succeed in India,whether competitors would bury Air Deccanor whether there really was a middle class outthere who will fly”, he said.Now a number of investment bankershave approached the carrier and showna “huge interest”, he said. “They wereinterested in having a dialogue and I said:‘yes, come with proposals and we’ll take alook.’ If the market turns, we may not take it[the investment].“If it drags on and we feel we need a littlemore cash, perhaps we will. We are keepingour options open.”Another option for the airline is flightsoverseas. In India an airline has to be inoperation for five years before it can winrights to international routes. In Air Deccan’scase, that will be in 2008.“We will definitely look at the inner circleof the A320 range, “said Gopinath. “Theseare places such as Sri Lanka, Singapore, theASEAN [Association of South East AsianNations] region as well as the Middle East,where there’s a large population of Indians.But the five-year rule suits me, becauseright now I’m concentrating on the domesticmarket.”Kingfisher a jewel in ATR crownATR c h i e f e x e c u t i v e , F i l i p p oBagnato, said a strong recovery inthe turboprop market had produceda 30% increase in turnover, fromUS$542 million to $700 million, forthe company’s 2006 financial year.Speaking at a press conference where heannounced the results, Bagnato said ATR nowhad 126 customers in 70 countries, with 11 newcarriers added to its client list in 2006. Newregional customers signed up by ATR last year wereThailand’s Nok Air, Sun Air in Fiji, Indonesian AirTransport and Transmaldivian in the Maldives.Airlines ordered 63 aircraft in 2006 with 17 of thenew planes – all ATR 72-500s – bound for India’sKingfisher Airlines (15) and TransAsia Airways(2) of Taiwan respectively. Kingfisher ordered 20ATR72-500s in November 2005 and another 15 ofthe aircraft type in February last year.Following the Kingfisher order, ATR signed its largest GlobalMaintenance Agreement ever with the Indian carrier, valued atATR chief executive,Filippo Bagnato: ATR72-500 aircraft has 15%less fuel consumptionper person than aEuropean carUS$50 million for spare parts and maintenance ofthe carrier’s ATR fleet.Kingfisher is also the first airline to install inflightentertainment systems in all seats of its ATRs as wellas light emitting diode (LED).ATR will deliver 44 new aircraft in 2007 andanother 60 airplanes the following year, businesspredicted to take turnover at the Toulouse-basedcompany to US$1 billion.Bagnato said new turboprops have importantgrowth potential in emerging markets in Russia andChina as well as South America and Africa.Other recent developments for ATR were theestablishment of a parts and spares centre inAuckland in 2006, a similar facility in Delhi and acustomer support centre in Bangalore.ATR said in a statement issued with the profitannouncement that its ATR72-500 aircraft has 15%less fuel consumption per person than a Europeancar and 60% less than a 70-seat jet.ATR financial partners are Alenia Aeronautica and EADS.MARCH 2007 ORIENT AVIATION INDIA 13