Air Deccan: The First Low Cost Airline in India

He pointed out that India had 15 mn rail travellers every day. Of these 1,70,000 travelled in the air conditioned class and were potential customers for Air Deccan owing to the comparable prices. Gopinath further said that the US had 40,000 commercial flights every day whereas India had only 400 flights a day. But India had four times more population than the US, so it could theoretically run 1,60,000 flights daily! Gopinath said, "Assuming that we had tapped 1 per cent of this potential, we still need 1,600 flights a day. Therefore, we need a quadruple jump in the number of commercial flights." Air Deccan defined its target segment as upper middle class in the short term but planned to tap the lower middle class aggressively in a couple of years...

Since the announcement of the Rs 700 category fares, the airline received 10,000 calls a day as against 5,000 a day earlier. In response to Air Deccan's plans to offer services on major trunk routes, the FSAs quickly announced a fare reduction on these routes (Refer Exhibit X for new flight services of Air Deccan between April and September 2004). Sahara announced its "Apex fare scheme" for metros and reduced its fares by 30% (Refer Table I for Sahara's Apex Fare Schemes). JA followed by cutting prices on major metro routes by as much as 69%. IA also launched a super apex scheme and cut its prices to match that of JA. Air Deccan's success encouraged many other companies to establish LCAs...