Capt Gopinath plans charter flights at cheap rates

The irrepressible Captain Gopinath is at it again. The last time you heard about him in any substantive way was around May of last year, when his express logistics company, Deccan 360, was in a tailspin.

That business, while promising, was felled by volatile fuel prices, a weak freight industry, an aggressive growth plan and a business strategy that should have orchestrated tie-ups with freight-heavy retail biggies for its bread and butter.

But, Gorur Ramaswamy Iyengar Gopinath is not someone who sits around moaning about his fate.

After all, before he pioneered the low-cost airline business, he was a poultry farmer, a silkworm farmer, a motorcycle dealer, an Udupi hotel owner, a stockbroker, an irrigation equipment dealer, and an agriculture consultant, according to his autobiography, Simply Fly.

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A future in charters

Now, he is trying to reinvent the charter business, which ironically, was his first foray into the aviation space, some 15 years ago. While you would normally pick a corporate don such as a Vijay Mallya or a Mukesh Ambani as your target client, Gopinath is, in his familiar style, turning this industry model on its head.

His plan is to now bring this sort of charter service to the common man, who will be able to hopscotch across the five major towns in Gujarat for around Rs 5,000.

"After I started my charter business, I always had this in mind that there is immense potential in connecting emerging tier-III and tier-IV towns. However, Air Deccan happened subsequently and this took a back seat," says Gopinath.

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Deccan Shuttles, the new division of Deccan Charters, plans to connect Ahmedabad to Jamnagar, Kandla, Surat and Bhavnagar via a 20-40 minute flight.

"Normally, if you have to cover this distance by either train or by road, it would take at least six to eight hours and, hence, this will provide enormous benefit for businessmen if they hop over on Deccan Shuttles," added Gopinath.

He says the push to get into this business came from Gujarat Chief Minister Narendra Modi who wondered why he didn't replicate the success of Air Deccan in Gujarat.

To start with, Deccan Shuttles will fly a total of 10 flights from the five towns in a day.

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"Even though it is a non-scheduled charter, we will operate our flights in a specific time-band which will be made known to the people who buy tickets," Sanjay Saihgal, vice-president: business development at Deccan Shuttles, told Business Standard.

And what will Deccan Shuttle do if there is not enough load factor? "You cannot fly immaterial of the load factor. It is not Air India, subsidised by the government of India. But, as an entrepreneur, you are an optimist," Gopinath said.

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Untapped potential

Gopinath has another trick up his sleeve -he sees immense potential in tapping the tourism sector.

"For nearly 50 years, the wildlife reserves in Africa and Australia have been flying tourists to and fro on a 12-seater aircraft from a major airport to deep inside a game reserve where there is nothing but a strip to land a small aircraft on. I have studied that sector to a large extent and I am sure we can replicate that model here," he added.

Connecting national parks such as Ranthambore and Bandhavgarh, or for that matter, even pilgrimage towns such as Haridwar and Varanasi, has immense potential according to Gopinath. 

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India has as many as 500 such airstrips and Gopinath is discussing sprucing them up with the relevant authorities.

Business Standard has learnt that Deccan Shuttles will be spending around Rs30 crore to put in two nine-seater Cessna Grand Caravan aircraft in Gujarat. Another three will be added subsequently as the traffic grows.

After Gujarat comes Karnataka. Gopinath is planning to connect Hubli, Mangalore, and Mysore, which require a 8-10 hour journey by road or rail to get to. Subsequent to that, there is a possibility of opening up connections in the Northeast.
"It is an interesting business model and Gopinath has immense experience to see it through," says Kapil Kaul, CEO, South Asia at CAPA - Centre for Aviation, a global aviation intelligence firm.

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"Picking Gujarat is a good decision to start with. However, it is a long-gestation business and Gopinath has to weather the cost vagaries which this business comes with. Initially, there may not be volumes to build scale but over a period of time," adds Kaul.

The advantage that Gopinath has is his parent company - Deccan Charters - with Rs100 crore in revenues and a fleet of 17 aircraft: 12 helicopters and 5 fixed-wing which are used for a range of services, such as corporate charters, heli-tourism, heli-pilgrimage, medical evacuation, banner towing, geophysical and mapping services and offshore and logistics support.

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The company has an employee base of 300, an extensive maintenance and marketing relationships with a slew of corporates which own private jets.

"On an average, a corporate house uses 200 hours of flying time in an year when the aircraft can do 800 hours. What we bring to the table is that while we also maintain the fleet, we market them and put the idle hours to better use," he added.

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Potential turbulence

While these utilisation numbers sound promising, the plan does have some inherent risks. High operating costs is one of them.

It will cost an average of Rs 50,000 an hour to keep a Cessna Grand Caravan in the air. With just nine seats in this aircraft, Gopinath will have to charge at least Rs 6,500 a seat to cover costs and make some profit.

"Not many people will take a ride at that cost," said an industry analyst.

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"While it is true that people will save time by taking this charter, Gopinath has to contend with the fact that the highways are pretty impressive in Gujarat between these five towns and it is not all that tiring to take the road. If two or three people from a company want to reach Surat from Ahmedabad, going by road will be much more feasible. It is an uphill task, as we do not see much volume to sustain such an operation," the analyst added.

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However, Saihgal has a different perspective. "While it is true that the average cost is around Rs 50,000 per hour for this aircraft, there are different ways in which we can drive up efficiencies and bring down costs. Ideally, we should be breaking even when we fly with a load of anywhere between 70 and 80 per cent on a flight," he said, adding that the only challenge he was likely to face was of spreading the message about the service.

Given how his last venture imploded, some might wonder why this new plan would succeed?

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"While a large part of the new business is based on market research after extensive talks with corporate houses and travel agents about emerging towns, it is not entirely on that basis alone. It is based on optimism, exposure to market, understanding of the culture, the geography and how the country has evolved," says Gopinath.

"It requires a certain amount of courage, gut feeling and a deep passion to kick-start such ventures," he reasoned. "Some may work out, some may not. You need to be dynamic on how you will solve the problem and then work your way out of it," he added.

Spoken like a true serial entrepreneur.