The Regional Connectivity Scheme may see Capt Gopinath’s return
While on a helicopter ride in India, Captain Gorur Ramaswamy Iyengar Gopinath saw TV antennae jutting out of low and middle income group houses in his home state. The thought immediately struck him that if these low income group families could afford a television set, why couldn’t they afford to fly? That was the genesis of Captain Gopinath’s experiments with low-cost flying in India. A thought that would, in a few years, germinate into India’s first, ground-breaking low-cost airline.
In many ways, Capt Gopinath and his Air Deccan changed Indian aviation forever, transforming it from being a carrier of just the rich and famous. Says former Air India executive director and aviation veteran Jitendra Bhargava, “He initiated and brought the low-cost aviation model to India. He was extremely enterprising and started the slogan, ‘everyone can fly’ and successfully moved aviation from being an elitist concept to one belonging to the common man.”
With the government announcing the Regional Connectivity Scheme, Captain Gopinath is planning a comeback to his area of expertise. His aviation services company, Deccan Charters, is one of the 20 air operator permit holders to register for participating in the bidding for regional routes. This could see him offer passenger aviation services again.
According to Gopinath, there is tremendous scope for regional airlines in India, as there many airstrips which were unconnected by commercial airlines. This includes some of the popular tourist circuits, like Shimla, Kulu and Manali in the north or Bellari and Hampi in the south or religious circuits. Then there are smaller cities--small business centres that lack proper air connectivity and ignored by large carriers because of low passenger load. Gopinath has experience in this area as well, for his Deccan Charters provided charter services to pilgrims in religious destinations in states like Uttarakhand.
“There are over 600 airstrips that have zero or no connectivity. About 500 of them have no connectivity at all. The idea is to give them connectivity,” Gopinath told Outlook. He said that most regional routes suffered because 90 per cent of the passenger load was in the Delhi-Mumbai-Bangalore circuit, with Delhi and Mumbai accounting for 50 per cent of the passenger load.
Says Kapil Kaul, CEO & Director, South Asia, at aviation consulting firm CAPA, “Capt Gopi is a true pioneer and will always be a critical part of India’s modern aviation story. Rate him as a successful aviation entrepreneur who made money with Deccan and also had a profound impact on the industry, especially during the early years, post 2003-04. However, though big on vision, Capt Gopi was slightly low on execution and took more risks than required. Expect him to use all his learning and experience for last 12-13 years to create a very successful regional aviation company--though it will be challenging.”
While he is largely known as the pioneer of low-cost aviation in India, Gopinath, Captain Gopi to his friends, is a retired army man, an aviator, an entrepreneur, a politician, a farmer and an author all rolled into one and has worn all these hats with rare aplomb. Born into a middle class family, Gopinath’s tryst with aviation began much before Air Deccan when, in 1997, he started Deccan Aviation, a chartered airline in Bangalore, with a fleet of a few helicopters along with a close friend from the Army. Soon, his company extended operations to the metros of Delhi, Mumbai, Calcutta and Chennai, and other bigger cities like Bangalore, Hyderabad, Ahmedabad, Indore, Bhubaneswar, Jamshedpur, Kochi and Cooch Behar.
Gopinath started Air Deccan in 2003 and introduced many new concepts to Indian aviation. The first of these was the Re 1 ticket rates, which was unprecedented in the history of Indian aviation and forced other carriers to relook at their pricing model. He also started e-ticketing for the first time in Indian aviation, which has become a norm now. Some other practices, like no free meal and sale of food on board, were also introduced by Gopinath. The airline also flew to small cities and towns for fares as low as Rs 700. Many of these destinations, mostly regional, have stayed unconnected by air since Air Deccan’s demise in 2007.
Yet, Air Deccan’s fortunes were short-lived; the model Gopinath espoused was deemed unfeasible. “Although he spurred growth in the market and forced all carriers to go low cost, it was an unsustainable model and there were heavy losses,” says Bhargava. And as prices went up and fuel became costlier, his model started recording more losses and became almost unviable. Aviation consultant and CEO, Martin Consulting, Mark Martin, says, “Captain Gopinath has his masters in disasters. He ran his business in five-six years of continuous losses and his sale of Air Deccan to Kingfisher was also a distress sale, as it was a disaster of an airline.”
There was also competition which forced losses on Air Deccan; soon, it started losing out to competitors, as the noughties also saw the entry of several other low-cost carriers.
That did not stop Gopinath from starting newer ventures in the aviation sector. In the years after his sale to Kingfisher, he was to launch several ventures. This includes Deccan Logistics and Deccan 360, Deccan Shuttles (Gujarat) and Deccan Charters. Many of these ventures became disasters, because of factors ranging from bad management to lack of high-paying clients. In 2009, or just two years after Air Deccan was acquired by Kingfisher, Gopinath started Deccan 360 Cargo, an aviation freight service. But this venture fell into trouble soon and by July 2013, the company was ordered to close down by the Karnataka High Court, which sought recovery of amounts due to some parties.
But Gopinath’s most serious attempt to return to commercial aviation was in 2013 when, with the help of some foreign investors, he had planned to launch a new commercial carrier, a likely reformed version of Air Deccan. This was also to coincide with the end of his non-compete clause with Kingfisher in February 2013. But his venture could not take off as the Tata group, along with Air Asia, launched a low-cost carrier, and Gopinath’s investors backed off.
Gopinath’s foray into politics was a disastrous one—he lost on both his attempts to contest polls. He first contested for the Lok Sabha in 2009 as an independent candidate from Bangalore and again as a candidate of the Aam Aadmi Party in the last 2014 elections.
Will his current attempt to get back to serious commercial aviation be the harbinger of better tidings? Experts feel it may be more difficult for him to sustain and run a profitable business on regional routes, because the dynamics here are totally different from national commercial carriers. To begin with, Gopinath would require a totally different classification of aircraft for regional operations. “In 80 per cent of the airports, even an ATR aircraft cannot land, so we will need a different class of aircraft, mostly 18-19 seaters,” says Gopinath.
Says Martin, “He can only use 10-18 seater aircraft, as large aircraft cannot be used on regional routes. Plus, smaller aircraft use Avgas instead of Jet fuel, which is more expensive and has more taxes. This will make business viability difficult.” Add to that the fact that banks, after the Kingfisher experience, will have less risk appetite for funding an airline and there will be competition from others for a small pie. According to Gopinath, it is a challenge, as companies like Dornier and Fokker had stopped making small aircraft and only 10-12 seater aircraft are available. “It is a huge challenge to make it work but the government has said that it will give subsidies. But we need to change rules and regulations of DGCA as we are still following rules of 1937, which is the biggest impediment to growth in this sector,” he said.
But Gopinath has always gone against the tide. In 2003, he rewrote the rules of Indian aviation. With the sector on the threshold of a change, with competition at its severest, it may be time for the high flyer to take wing again.