External Forces Shaping The Future Of The Airline Industry

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But a year later, at the age of 52, Gopinath began service in south India with a leased 48-seater, $10 million in investment and a conviction that India's burgeoning middle class, which was already buying color TVs and cell phones, would buy air tickets.

Barely two years into its operation the no-frills airline, Air Deccan, has grown from one aircraft to 19 and from one daily flight to 123. It has placed a $1.1 billion order with Airbus and will get an aircraft a month for the next 64 months. In its first full year of operation, ending in March, the company flew 1 million passengers and had revenues of $75 million. Projected revenue for this year: $250 million.

Also, in 2004 the company raised $40 million in private equity from ICICI Venture Funds Management, India's largest private- equity player, and Capital International, an arm of the huge Los Angeles money manager Capital Group. Air Deccan is looking to go public over the next few months. "This is not the story of Air Deccan's growth--it's the story of the growth of India," says Gopinath.

His success in the fast-growing aviation industry has set off a gold rush. Two new airlines--Delhi-based SpiceJet Limited and beer baron Vijay Mallya's Kingfisher Airlines--started flying in recent months. Several new players are waiting in the wings--including Indigo, backed by U.S. Airways' former chief Rakesh Gangwal, and GoAir, which is backed by Jeh Wadia from the controlling family of the giant Bombay Dyeing & Manufacturing.

"Everybody knew that India was a big market--but Gopinath went out and actually proved it," says Kapil Kaul of the Center for Asia Pacific Aviation, a consultancy. "He led the way--and led it successfully."

The man behind the upstart airline traces his roots to a village in the southern Indian state of Karnataka, where his father was a schoolteacher. His own education veered into nearly eight years in the Indian army. Tired of regimentation, he veered again, into silk farming on a family plot.

The transition from the cocoon to the cockpit came in 1995 when he teamed up with a friend from his army days, Captain K.J. Samuel. The two of them decided over a game of squash that India needed a heli-charter company. So Gopinath and Samuel started one, with the Deccan name (drawn from the plateau upon which Bangalore sits, the company's headquarters then and now).

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