Making an airline pay when flyers won't

New Delhi: When G R Gopinath launched his maiden low-cost carrier (LCC) flight from Bangalore to Hubli in August 2003, he couldn't know this would change India's aviation history. Gopinath's Air Deccan was changing the rules of the game - it audaciously offered fares on a par with or lower than travelling in a II class air-conditioned rail coach and nearly half of that on travelling in a I AC berth. And, about a third of what full service air carriers (FSCs) were charging their well-heeled customers.
Gopinath said he'd offer no food or frills or even seating numbers. But first-time flyers (half his passengers) lapped it up, as they'd never earlier dreamt they could fly, too. Air Deccan also opened markets in smaller cities and towns, such as Jabalpur and Hubli, where hitherto no one flew, by connecting these with short-haul ATR aircraft.

The model, in hindsight, seems a no-brainer in a country with so many cost-conscious travellers and airline travel frequency so abysmally low. Together, LCCs have 10 years later grabbed 68 per cent of the passenger market, from a mere 1.3 per cent in 2004. Most FSC's are struggling financially, forced to drop fares to the same levels as LCCs, though their costs are far higher, to only keep afloat.
Read News in full 31/12/13 Surajeet Das Gupta/Business Standar