What happened to Air Deccan?

7 min readNov 16, 2020

After the recent Surya starrer Soorarai Pottru based on Captain G R Gopinath’s autobiography “Simply Fly”, most of us would have had thoughts like “What really went wrong with Air Deccan?” or “How much of this movie is actually true?”. In this post, I will try my best to present an analysis of what happened to Air Deccan, and why the low-cost carrier merged with Kingfisher.

Air Deccan’s logo in 2005 emphasizing Air Deccan’s goal of making air travel more accessible.

Air Deccan’s Vision and Mission Statement

Air Deccan’s vision was to make the common man fly, which can be seen through Captain Gopinath’s low-cost business model. Air Deccan was the first low-cost carrier in India to simplify air travel by providing a safe and reliable mode of transport that could be easily accessed and booked by the common man through either travel agents, call centers, and even the internet, which was a pretty big thing at that time.

So Air Deccan became the first Indian company to integrate all of its multiple distribution channels with the internet, thus avoiding the costs of printing tickets which gave it an edge against the other carriers it was competing with.

ATR Aircraft used by Air Deccan for its regional destinations.

Business Model and its Growth

Air Deccan adopted a “no-frills low cost” strategy, which basically means they reduced the costs by getting rid of all the non-essential features. Their focus was on lowering the costs as much as possible in order to get as many customers as possible. By being an early mover to this industry, they were able to tap into the low-cost airline market.

Air Deccan wasn’t focused on competing against the other airlines in the aviation industry but aimed to target the customers who traveled in the upper classes of the railways. They targeted middle-class passengers by offering competitive pricing which was sometimes even lesser than an upper-class ticket in the railways.

By 2005, the airline grew rapidly, with nearly a 30% increase in the passenger numbers compared to the previous year. It was able to offer very low costs by outsourcing most of its business operations and focusing only on its core operations. They adopted strategies to maximize aircraft utilization through its flying hours and being the carrier with the widest reach in India. They had also strategically tied up with Hindustan Petroleum to sell tickets for their airline at all fuel stations throughout the country. This would allow Air Deccan to expand its retail outlets throughout the country.

By 2006, they became the third-largest airline in India, with a 19% market share expanding to 55 airports, and flying nearly 260 flights per day. Their fleet consisted of only 30 aircraft at that time, but by the end of 2006, they had placed an order for 30 more A320s. They had a vision to reach even the remotest places in the country, where no other carrier would even go, thus the customers would develop a sense of loyalty towards the company.

How were they able to offer one rupee tickets?

The one-rupee tickets were offered in order to achieve Air Deccan’s motive to “Enable every common man to fly”. Air Deccan really cared about its vision and was focused on giving a lot of middle-class people their first experience in flying. Overall, the tickets would cost around Rs 221, when included with taxes. Also, the number of seats which would get this one-rupee offer would also be very limited. I feel that this was a way of getting more people into the aviation market segment, and also a form of advertising for Air Deccan. The tickets were non-refundable and had cancellation charges, and no refunds or accommodations were provided for people who missed their flight.

It is not the elite that I consider as my customers. It is the humble cleaning women of my office, the auto-rickshaw driver, and other such people that we would like to cater to. We want them to dream that they too can fly, and we want to make that dream happen. — G R Gopinath, Founder of Air Deccan

Strategies that made Air Deccan Successful among other low-cost Carriers

Air Deccan had very well-versed strategies that helped it to be more successful than its competitors.

High Aircraft utilization

This was one of the major factors attributed to the success of Air Deccan. They were able to maximize aircraft utilization, and thus directly increase its flying hours. They were able to achieve this by a well-planned flight scheduling with its pilots, which automatically increased the number of seats available on the plane. They were significantly able to reduce their Turn-Around-Time by investing in technology, thus directly contributing to their revenue generation.

2. Route Optimization

Air Deccan only operated point-to-point routes, starting from seven base airport stations. They did not provide any options for connecting flights, thus decreasing the turn around time for all their planes. This move definitely helped them in reducing their operational costs.

3. Efficient utilization of its Fleet

Air Deccan devised different strategies in order to maximize the utilization of their fleet. Initially, Air Deccan’s fleet only consisted of ATR-2 TurboProp, which had a maximum capacity of 48 seats. Later they added, ATR-72, and Airbus 320s to their routes. They used bigger aircrafts for their busier routes, and smaller aircrafts for their regional routes in order to maximize the accommodation of customers and reduce the operating costs such as fuel associated with them.

4. Cost Reduction Strategy

Air Deccan followed an efficient low-cost strategy, following a “no-frills” approach, where they removed all un-necessary expenditures such as providing free meals, lounge access and keeping the number of cabin crew members to the bare minimum. Further, the non-core operations of the company were outsourced to other third-party companies which allowed to cut costs significantly.

5. Marketing and Advertisement

Air Deccan also achieved significant advertisement revenue from in-flight ads, and also had an advantage due to its competitive pricing strategies. It also relied on the internet to market its brand, and increase awareness among the society.

How did it fail then might be your question?

Air Deccan’s competitive advantage mostly raised due to the fact that they were new entrants into the low-cost airline market. However, with time there were new entrants like Jet Airways and SpiceJet that were stealing market share from it. Unable to keep up with the competition and with the rising fuel costs, Air Deccan had a net loss of around 340 crores (30 Million USD) by June 2006. Apart from the new entrants, taking up the market share, Air Deccan also had expansion plans in place with the purchase of nearly 20 new aircrafts, and new routes which were significantly adding to its debts.

Kingfisher?

Although Captain Gopinath believed that since the business models of both Kingfisher and Air Deccan were different, it would be very difficult to move ahead; there was increasing pressure from his board to go with Vijay Mallya’s offer, as they were facing high losses and had expansion plans in place, so he accepted to merge with Kingfisher and was satisfied only after hearing that Mallya wouldn’t take control. Negotiations then began, and United Breweries Group (Kingfisher’s parent company) purchased a 26% stake in Air Deccan.

AirDeccan was then re-branded to Simplifly Deccan in December 2007 and took Kingfisher’s livery. However in 2008, Air Deccan’s business operations were merged with Kingfisher and Mallya introduced significant changes to the Air Deccan brand, changing Air Deccan’s vision and motive of being a common man’s airline. He wanted to give the airline a premium touch, so he stopped outsourcing staff for the airline, increased the turn-around times, and stopped selling the tickets at very low fares. Later in 2008, Air Deccan was renamed Kingfisher Red, and all of its operations were completely migrated onto Kingfisher. Little did we know that Kingfisher would also go bankrupt, being shut down with all of its operations due to high debts in 2011.

Air Deccan Now

Soon after the rebranding of Air Deccan into Kingfisher Red, the founder Gopinath managed to retain the name “Air Deccan” by registering soon after it was dropped. Even though he had no intention of relaunching the airline at the time he wanted the brand back. He has then made attempts to re-launch the airline back under the regional connectivity scheme UDAN flying to a total of four destinations as of 2019. He focuses on providing services to regions where no major air carriers provide their service, in order to have minimal competition. However, as of now, the airline has halted its operations due to the global pandemic.