Air Deccan may be in the black before Kingfisher
10 September 2007
It offered the cheapest fares, and not surprisingly, made the biggest losses. But now, surprisingly, it looks like the once financially besieged Air Deccan - it had to sell 26 per cent of its equity to Kingfisher Airlines chairman Vijay Mallya's UB Holdings to keep its head above the water just a few months ago - is likely to break even before Kingfisher Airlines does!
In Deccan, the gap between cost and revenue per passenger is around Rs400 to Rs500. Close to Rs300 of this has already been bridged through congestion and fuel surcharges. Better revenue management and improvement in yields should enable India's first low-cost carrier to break even by the last quarter (Q4) of financial year 2007-08. In contrast, Kingfisher will continue to lose.
Kingfisher's losses were around Rs400 crore in 2006-07, but are likely to come down by half in 2007-08. On domestic operations alone, it hopes to achieve breakeven point sometime in 2008-09. But if it is allowed to start international operations early next year, full breakeven could be pushed back a bit.