Air Deccan wings the trunk routes, creating low-cost aviation history

Air Deccan, the no-frills airline, on Wednesday sought to create Indian aviation history by flying passengers to Delhi from Bangalore on a fare of only Rs 500.

Just a fraction of the seats will go at that price but the hoardings of the airline all over the city announcing the introductory fare was enough to capture the public imagination.

"A janitor at the Taj last evening came up to me and asked how he could buy one of those cheap tickets," founder managing director Capt. G R Gopinath revealed with pride.

The mood at his press conference before the flight took off and that of the passengers on the inaugural flight was celebratory. For Capt. Gopinath, it was an occasion to both look back and forward.

He noted with satisfaction that the pioneering venture had successfully completed its first year of operations and announced that till now regional airline, which has so far flown to destinations like Hubli, Belgaum and Vijayawada, is set to connect Bangalore not just to Delhi but to Mumbai and Kolkatta also.

For the expansion the company has signed up 11 A320 on a mix of lease and purchase, with each having a seat inventory of 180. Capt. Gopinath used the Bangalore-Delhi fare example to unveil an interactive fare model where tickets on all routes start at a nominal Rs 500: "The broad rule of thumb for the pricing is 25 per cent (45 seats) of inventory will be available at prices ranging from Rs 500 to Rs 4,999, 50 per cent (90 seats) at Rs 5,000 and the balance 45 seats at Rs 5,001 to Rs 8,000. For this route other carriers have a regular one-way fare of about Rs 10,000 to Rs 10,400."

Air Deccan will initially receive three new generation A320s. Whilst the first took off for Delhi on Wednesday, the other two will start commercial operations in September 2004 out of Chennai.

Four more will enter the fleet next February-March and the last batch of four planes "is on option now but if demand keeps up with projections, they will also be brought on board soon afterwards."

Gopinath further announced that he was adding five more ATR-42-500s to the existing fleet of seven which connects the smaller cities.

The company, according to Gopinath, is about to close a private equity deal with a global player to fund these expansions. He did not divulge numbers but it is learnt that the company will raise around $50 million through this round of funding. "Each Airbus costs nearly $60 million to buy, while an ATR comes at around $14 million."

While this was affordable, what was causing concern was the price of aviation fuel which was skyrocketing in tandem with global oil prices.

Gopinath urged the Centre to offer at least one palliative which was in its hands "" allow airline companies to hedge future oil price fluctuations.