G.R. Gopinath, the charismatic entrepreneur who went from being an organic farmer to running India’s biggest low-cost airline, has found himself and his airline in the news in the last few weeks. Deccan Aviation Ltd, which operates Air Deccan, announced losses of Rs213 crore for the January-March quarter, its biggest loss since it went public. The company is involved in a high-profile search for up to $100 million in private equity to stay afloat and Kingfisher Airlines Ltd chairman and chief executive Vijay Mallya is already biting at the heels, telling everyone he is interested in the four-year-old airline, which carries one out of every five domestic passengers.
In a wide-ranging telephone interview with Mint, Gopinath says the airline’s financial woes are temporary, and that private equity investors are on their way to bail out the airline. He sets the record straight on a week of high-profile back-and-forth barbs between him and Mallya, and talks about how frustratingly close he feels the airline is to breaking even.
Edited excerpts:
Would you like to elaborate on Air Deccan’s financials?
We have very large investors in our company, investors who are big by international, global standards. Two of those institutions are Capital International and ICICI Venture, and the last analysis is that if we don’t find any money, then they will pump in the money; they are here for the long term. They have been here right from day one, when we had just one aircraft and nobody believed in us and analysts never gave us a chance. But people who believe in India will put money in Air Deccan. It is not easy, but it is a challenge worth taking; it is a strategy that will require funding for maybe one or two years.
How much longer before your operations will be able to fund everything?
In our prospectus, we said that we should be in profit in 2008... We never said we would be in profit earlier.
Are you still on track for that?
What is all the panic about? We said very clearly we would be in profit in 2008. We foresaw that, because of a temporary, sudden burst of so many aircraft from so many airlines, there would be some amount of bleeding, especially on the trunk routes. Now we have redeployed our aircraft in a different manner, where 80% of our aircraft are on the non-metro routes, and we think we could be in profit earlier.
What do you think about passenger resistance to paying more for Air Deccan tickets? You have tried on some routes to get them to pay more, but they just won’t do it.