After shocking consumers with low fares, Gopinath knows what he wants to do next. By ADITI PRASAD
“Giving away a part of Air Deccan to Kingfisher
Airlines was like a doting father giving away his daughter in marriage. She’s still a part of you, yet she is not with you,” says a remorseful Gorur Ramaswamy Iyengar Gopinath (Capt. G. R. Gopinath to you, and the man who made flying affordable to millions of Indian middle class). Under tremendous pressure and obviously bone tired, Gopinath had just emerged from another of those marathon 3-hour sessions with the Accenture team in Air Deccan’s Bangalore headquarters. Accenture is entrusted with the task of figuring out how best to bring about the synergies between the two merged airlines.
Even within the Deccan building at Cunningham Road, Bangalore, the mood is definitely somber. Everyone is waiting to see what the Accenture report (to be finalised on December 19) will throw up and how synergies between Kingfisher and Deccan will take shape. The trepidation is expected as Deccan is like an Udipi restaurant for the middle class, while Kingfisher is the 5-Star hotel for the SEC-A affluent class. In fact, apart from a common boundary wall between Gopinath and Vijay Mallya’s residences (both have bungalows at Bangalore’s Vittal Mallya Road), the two business leaders have nothing in common. Mallya was born with a silver spoon in his mouth, is flamboyantly fashionable and loves the good things in life; Gopinath is rooted to the ground, somber and lives in a minimalist manner. In Gopinath’s own words: “Our lifestyles and interests are totally different. We sometimes get together and enjoy each other’s company, but that’s that.”
So, where does that leave Capt. Gopinath, the entrepreneur who dreamt of making Indian tourists to fly at rock-bottom rates? Ask him that and he gives a coy, secretive grin that almost tells you that he’s already planned his next big venture. Talk to him at length, see the way his eyes still light up on the topic of low cost airlines, and you are tempted to ask Gopinath the most obvious question. Do you plan to launch another low cost airline? “No one stops me from launching another low cost airline, but it would be unethical to do so now,” he says, shaking his head with obvious regret. “Mallya has shown confidence in me. He blindly put money into Air Deccan. I cannot break his trust now,” he adds.
Gopinath insists that he will continue to be at the helm of affairs at Air Deccan for quite some time. “Very rarely, your dreams as an individual or a company are aligned to the nation’s dreams. I want my market to expand to the other India, where a majority of Indians live. We’re aiming for profitability by 2008, and will achieve it,” he avers passionately and confidently. But given Deccan’s losses, partly due to Gopinath’s fast expansion into unviable routes (read: tier II cities where the other India lives) and Mallya’s pragmatic intervention, Gopinath’s passion may not see the light of the day anytime soon. So will the entrepreneur in Gopinath start dreaming afresh?
Market watchers opine that there could be a reverse merger between Deccan Aviation, the parent company of Air Deccan and Gopinath’s helicopter charter division, and Mallya’s Kingfisher and the charter business might be hived off into a separate entity, the control of which may rest in Gopinath’s hands. Interestingly, the charter business of Deccan is doing phenomenally well. It generated a business of Rs.700 million in the last financial year, on the back of new biz areas like helicopter tourism, offshore oil explorations, geophysical mineral and power line survey. Perhaps Capt. Gopi’s ‘secretive’ grin pertained to this new business opportunity, already waiting in the wings. Or perhaps, as a little birdie told me, he is really serious about launching a cargo and logistics airline next. After all, he’s persuaded many train travelers to consider flying as an option; so what stops him from persuading fast-developing India’s myriad companies to consider transporting their wares by air, instead of the usual land and sea routes.
On May 31 this year, in a lightening quick deal (it took three days to get sealed), Mallya acquired a 26% stake in Air Deccan for Rs.5.5 billion. Then toward the end of October, Mallya’s UB Group bought another 20% shares in an open offer, taking the flashy tycoon’s total interest in Air Deccan to a near-majority 46% and things have never been the same at Air Deccan headquarters again. The UB Group is now in the process of picking up 5% more equity through creeping acquisition, which will take Mallya’s holding in Deccan to a majority 51%. With Vijay Mallya in the pilot’s seat, Air Deccan’s common man (their mascot for the last 4 years) obviously stood no chance. In November, the re-branding exercise began: the yellow and blue colors of Air Deccan were re-painted with the Kingfisher red; Air Deccan hostesses donned the red skirt of Kingfisher crew; and the biggest, Air Deccan’s name changed to Simplyfly Deccan.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
“Giving away a part of Air Deccan to Kingfisher
Airlines was like a doting father giving away his daughter in marriage. She’s still a part of you, yet she is not with you,” says a remorseful Gorur Ramaswamy Iyengar Gopinath (Capt. G. R. Gopinath to you, and the man who made flying affordable to millions of Indian middle class). Under tremendous pressure and obviously bone tired, Gopinath had just emerged from another of those marathon 3-hour sessions with the Accenture team in Air Deccan’s Bangalore headquarters. Accenture is entrusted with the task of figuring out how best to bring about the synergies between the two merged airlines.Even within the Deccan building at Cunningham Road, Bangalore, the mood is definitely somber. Everyone is waiting to see what the Accenture report (to be finalised on December 19) will throw up and how synergies between Kingfisher and Deccan will take shape. The trepidation is expected as Deccan is like an Udipi restaurant for the middle class, while Kingfisher is the 5-Star hotel for the SEC-A affluent class. In fact, apart from a common boundary wall between Gopinath and Vijay Mallya’s residences (both have bungalows at Bangalore’s Vittal Mallya Road), the two business leaders have nothing in common. Mallya was born with a silver spoon in his mouth, is flamboyantly fashionable and loves the good things in life; Gopinath is rooted to the ground, somber and lives in a minimalist manner. In Gopinath’s own words: “Our lifestyles and interests are totally different. We sometimes get together and enjoy each other’s company, but that’s that.”
So, where does that leave Capt. Gopinath, the entrepreneur who dreamt of making Indian tourists to fly at rock-bottom rates? Ask him that and he gives a coy, secretive grin that almost tells you that he’s already planned his next big venture. Talk to him at length, see the way his eyes still light up on the topic of low cost airlines, and you are tempted to ask Gopinath the most obvious question. Do you plan to launch another low cost airline? “No one stops me from launching another low cost airline, but it would be unethical to do so now,” he says, shaking his head with obvious regret. “Mallya has shown confidence in me. He blindly put money into Air Deccan. I cannot break his trust now,” he adds.
Gopinath insists that he will continue to be at the helm of affairs at Air Deccan for quite some time. “Very rarely, your dreams as an individual or a company are aligned to the nation’s dreams. I want my market to expand to the other India, where a majority of Indians live. We’re aiming for profitability by 2008, and will achieve it,” he avers passionately and confidently. But given Deccan’s losses, partly due to Gopinath’s fast expansion into unviable routes (read: tier II cities where the other India lives) and Mallya’s pragmatic intervention, Gopinath’s passion may not see the light of the day anytime soon. So will the entrepreneur in Gopinath start dreaming afresh?
Market watchers opine that there could be a reverse merger between Deccan Aviation, the parent company of Air Deccan and Gopinath’s helicopter charter division, and Mallya’s Kingfisher and the charter business might be hived off into a separate entity, the control of which may rest in Gopinath’s hands. Interestingly, the charter business of Deccan is doing phenomenally well. It generated a business of Rs.700 million in the last financial year, on the back of new biz areas like helicopter tourism, offshore oil explorations, geophysical mineral and power line survey. Perhaps Capt. Gopi’s ‘secretive’ grin pertained to this new business opportunity, already waiting in the wings. Or perhaps, as a little birdie told me, he is really serious about launching a cargo and logistics airline next. After all, he’s persuaded many train travelers to consider flying as an option; so what stops him from persuading fast-developing India’s myriad companies to consider transporting their wares by air, instead of the usual land and sea routes.
On May 31 this year, in a lightening quick deal (it took three days to get sealed), Mallya acquired a 26% stake in Air Deccan for Rs.5.5 billion. Then toward the end of October, Mallya’s UB Group bought another 20% shares in an open offer, taking the flashy tycoon’s total interest in Air Deccan to a near-majority 46% and things have never been the same at Air Deccan headquarters again. The UB Group is now in the process of picking up 5% more equity through creeping acquisition, which will take Mallya’s holding in Deccan to a majority 51%. With Vijay Mallya in the pilot’s seat, Air Deccan’s common man (their mascot for the last 4 years) obviously stood no chance. In November, the re-branding exercise began: the yellow and blue colors of Air Deccan were re-painted with the Kingfisher red; Air Deccan hostesses donned the red skirt of Kingfisher crew; and the biggest, Air Deccan’s name changed to Simplyfly Deccan.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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