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Gopinath to try low-fare model for Deccan 360

Nirbhay Kumar HYDERABAD

AIR Deccan founder GR Gopinath is replicating his low-fare model in the air cargo venture. Taking rival Blue Dart head-on, Mr Gopinath has keep tariffs lower than the leader.

“We are selling our product on expansion network besides distributing cargo at 10-15% cheaper compared to rivals,” Mr Gopinath, who has started his express logistics venture Deccan 360, told ET.

The cargo airline is planning to invest about Rs 400 crore in building infrastructure such as warehouse houses and fleet expansion.

The cost of carrying a kg of cargo from Delhi to Mumbai is estimated at about Rs 16 (inclusive of handling charges). Compared to this the cost of carrying a kg on the same route is less than Rs 4 by road. Only high-end products such as critical equipment, gold and medicine are carried by air.

The Bangalore-based entrepreneur had launched the country’s first no-frills airline Air Deccan but later sold the carrier to liquor baron Vijay Mallya, who merged the airline with Kingfisher.

Deccan 360 is currently operating with a fleet of seven cargo aircraft—five ATRs and two A310s—serving about 10 destinations. The express logistics company also operates a fleet of nearly 1,000 trucks.

“The mandate is to keep the cost structure as low level as possible by introducing new technology and operating a larger network. In the next few years, we would be serving 500 cities of the country,” Mr Gopinath said. Deccan 360 has decided to grow on franchisee model in most of the cities.

The competitors are, however, not happy with Deccan 360’s move to keep logistics distribution charges low. “Mr Gopinath should also say whether he is making profit or not. People should do either business or charity and not both the two at same time,” Aryan cargo and Express (ACE) chairman and managing director Mukut Pathak said.

The domestic express cargo business is estimated of close to $500 million. The industry is currently growing at about 15% annually. The industry has, however, potential to grow at much faster rate given the pace of economic growth in the country. “We have just 15 cargo aircraft compared to about 100 in case of China. The Chinese air cargo industry is worth about $5-billion,” Mr Gopinath said.



"Deccan 360 did a commendable job in getting across some paintings of a renowned artist for display at a prestigious art gallery in Mumbai. With the shipment being offloaded by commercial uplift due”.

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