Category Archives: Money Market

The Captain and The Deccan

A promise to change the way India flies. With these words Air Deccan flew into the Indian aviation market. Three years after the takeoff the flier is yet to take wings. Its stocks are sinking and its reputation threatening to reach never before reached depths. Its competitors refer to Deccan as the mistakes not to be made. And yet among all these ruins and losses Deccan has managed to grab twenty-one percent of the market.

BusinessWorld carried an Interview titled ‘Captain Gopi Defends Himself’ in its September Issue. The site requires registration (cumbersome) to read the articles.
What stood out in the interview was the way the Captain defended himself. Defense is not about giving excuses but that is exactly he does. Shifting the blame to other people whom he has employed directly or indirectly. While the fact that Deccan has improved and he has had to face hardships which can be contributed to politics and bureaucracy cannot be ignored neither can be the way the Captain shifts the blame to others.

If you do outsource your airport work to agents it does not mean that your responsibility ends there. What the agents do is in your name. Saying that they hired substandard staff does not improve your reputation one bit.

Nor does saying that your competition took away your men by paying more salary. In fact quoting the exact amount is sheer lack of PR skills.

His mathematical skills are not to great either by the looks of it. His yardstick of the Deccan’s worth is probably the most flawed thing I ever heard after a friend’s assertion that people in the South worship demons. As per the Captain the net worth of Saharah was around Rs 2,000 crore with a 7 per cent market share and therefore his should be around Rs 10,000 crore since he has 21 per cent of the market. Sounds reasonable right? Until you realize that this is 21 per cent of the people flying in India, not the air fare. The 7 per cent who fly in Saharah definitely pay more than what the average Deccan flier does.

Cost cutting is an effective way to reduce overheads and increase margins. But cost cutting to such an extent that who have people who do not know their business in being plain stupid. The captain compares his airline to our famed Indian Railways. Yes you read it correctly the Railways. Yes the people do not stop the next day’s train from leaving because their earlier train was cancelled, and it has happened to Deccan. Peevish and childish is the only way I can describe this sort of mindset.

The Deccan isn’t making profits and when your salary model depends upon profits and sale of ticket per cent then people are going to leave you and join your rivals who are offering a steady income at least.

The service and flights of the Deccan has improved over the last year or so. I can vouch for that having traveled via Deccan a couple of times. The change in service is noticeable but nothing to bother about as yet. The cancellations is down, the number of flights leaving within the hour has shot up to nearly 98 per cent (I am comparing with the Railways here as well. Ok when the railways were like really bad in the early nineties). The credit for this goes to Warwick Brady without a doubt. It just shows how you do need people with knowledge to run things, and for that you cannot have cost cutting at all levels.

In any industry a brand and it’s perception could be the making or breaking of it. Air Deccan has started badly and stamped its own reputation into the ground. People will not tolerate being told to ‘get out’ instead of ‘get off’ no matter how low you price yourself. Money may drive the Captain’s mind, but self-respect is something even the poorest don’t lack. Why the Deccan did badly can be conjectured long and hard. The lack of management at the top definitely did not help its cause. The interview with the Captain really begs the question what sort of management was there? Tata Motors had Ratan Tata at the helm. A man respected by his peers and public alike. The Captain does not arouse any sort of confidence in me at all. However hard it may be for me to say it – Good management cannot be replaced.

However the fight for the Indian skies has just begun. Pricing themselves to the ground, the Deccan might be able to capture a good percentage of the aviation market however it is those people who will pay the higher fare and still travel in Deccan which will make them profitable.

The Railways can afford to be late and cancel trains. They had a monopoly which is now being threatened by the low cost carriers. A thousand rupees more for a day’s worth of time is small price indeed. However the Railways have dedicated travelers in a way which the aviation industry cannot hope to match. Deccan has competition already. Indigo has started small but its services are excellent. Only thing I can complain about is that food is not sold in the plane. Other than that the felling of sitting in a fresh new aircraft on its first day in service is a great feeling compared to the awful noise created when the Deccan flight raised or lowered its landing gear.

Low prices will keep the airline afloat and flying for now but the question is whether The Deccan will ever soar?

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