THE 'LEAN AND MEAN' APPROACH OF LOW-COST AIRLINES ACROSS THE

WORLD

Low-Cost Airlines (LCA) usually operate on a 3-pronged policy of low operational costs,
appropriate positioning and no-frills services to harness only those customers who value
cheap fares. Low operating costs are ensured through cost containment on all aspects of
the airline's operation such as by contracting non-core activities, lower airport fees,
shorter time on the ground through quick turnarounds, simple boarding processes, higher
percentage of on-line sales of tickets thus, reducing commission payable to travel agents,
more number of seats on the aircraft by optimally utilizing space on the aircraft,
elimination of business class section on the flight, and ensuring that the flights run to full
capacities. Unlike legacy airlines, low-cost airlines do not use the traditional hub and
spoke model. They offer no inter-line arrangements for seamless passenger transition or
baggage handling from one airline to another.

Positioning would include targeting non-business passengers, passengers traveling on

leisure or on personal work, and price-conscious business passengers. It involves
aggressive marketing strategies to these targeted customers.

Services provided are very simple with meals and drinks provided for a price. Seats are
narrower to increase seating capacity. There are no seat reservations. Benefits such as
frequent flyer programs are done away with. No assurance of onward connections is
made to the passengers unlike in the case of legacy airlines. Hence, if passengers miss
their connecting flights due to late arrival of their flight from a previous sector, the
lowcost airline takes no responsibility for getting the passenger to the final destination,
providing a hotel for the night's stay, etc.

Currently there are 54 LCAs in the USA. Of these the most popular one is Southwest
Airlines. There are over 60 LCAs in Europe of which Ryanair and Easyjet are the most
popular. Asia has around 15 LCAs of which ValuAir, Tiger Airways and Air Asia are the
most popular. Australia and New Zealand's most popular LCA's are Qantas-owned JetAir
and VirginBlue owned by the Virgin group (Exhibit 6).

AIR DECCAN'S INNOVATIVE APPROACHES FORCONTAINING COSTS

When the proposal to start a low-cost airline was initiated, the company was valued at Rs.
100 cr. With a 20% dilution of equity, Rs. 20 cr. was raised additionally. Air Deccan's
project cost was just Rs. 35 cr., of which the balance Rs. 15 cr. (subsequent to the
infusion of Rs. 20 cr. after equity dilution) came from internal accruals. An audacious
step to launch such an ambitious project with minimal funding was possible because of
some very innovative measures.

INNOVATIONS IN BRINGING DOWN PROJECT COST

According to Captain Gopinath, the company saved significantly in the project cost
through several innovative methods such as:
* The entire global civilian air travel reservations are done on one of three reservation
systems such as Galileo and Saber, and nearly all airlines and travel agents are
subscribers to all the three systems. Instead of these international reservation systems, Air
Deccan used the reservation system that a Delhi-based software company had created.
This was a Web-based reservation system. This company was looking for its bell-weather
sale. The most popular reservation systems in the market (Galileo or Saber) require a
deposit of over half a million US$ and additionally cost the airline a recurring fee of
US$4-8 for every passenger ticket issued using the system, since there are huge
embedded costs such as those incurred for costs of credit, reconciliation, clearing house,
etc. With this innovative, albeit apparently somewhat risky step, the down-payment for
Air Deccan was only about Rs. 30 lacs and the per ticket charge was a fraction of a
dollar, with a downward sliding scale for the recurring charges per ticket as the volumes
picked up. Likewise, at the airports, airlines need to access the reservation systems to
enable them to issue unsold tickets on the spot before a flight departs. Global companies
own this networking system. They typically charge US$2 per ticket. In contrast, all that
Air Deccan or the travel agent or the passenger has to do is to access the Internet,
bringing down their ticketing-related costs by an order of magnitude.

Air Deccan negotiated smartly with aircraft vendors such as ATR (for the smaller
aircraft) and Airbus (for the larger aircraft). All aircraft of Air Deccan are leased from a
leasing company. Instead of the normal six months' lease deposit, Air Deccan convinced
ATR of the huge Indian market and managed to have the deposit waived. Gopi's warning
to them: 'Miss the opportunity to provide aircraft to Air Deccan, and you will have
missed the fastest growing aviation market in the world!' The monthly lease rental for an
ATR aircraft is US$ 60,000. This saved them a whopping US$360,000 per ATR on
deposit alone. Similarly for Airbus, the monthly lease rental is about US$200,000. Air
Deccan managed to convince Airbus to waive this deposit as well, saving the company
US$1.2 mn deposit per aircraft.

INNOVATIONS TO ACHIEVE TIGHT OPERATIONAL COST CONTROL

The company has also been able to keep its operating costs under tight control through
many innovative practices.

* Most of the tickets sold to passengers are through the Internet. A considerable
proportion of ticket sales are also done directly. Both these channels help reduce costs.
Commissions paid by legacy airlines for travel agents (including performance bonus,
etc.) are in the range of 9-10% against Air Deccan's flat 5%. Air Deccan exhorts its travel
agents to make up their commissions through higher volumes.

* A policy of 'Pay and fly' as against the 'Fly and pay' policy followed by the legacy
airlines ensures that there are no cash flow problems. Every passenger on Air Deccan has
pre-paid for the ticket before boarding the flight. In the case of legacy airlines, many
regular travelers have credit facilities with their travel agents, who in turn have credit
facilities with the airlines.
* A lower turnaround time of 15 minutes from landing to take-off of an aircraft ensures
that Air Deccan aircraft are air-borne for a much longer time each day. In contrast, legacy
airlines have turnaround times of 30 to 50 minutes. This translates into higher frequency
of flights, more flying time per day of the aircraft and consequently more passengers
flown per day by each aircraft.

* Through its Internet based system, Air Deccan can dynamically track load factors and
adjust fares on an on-line basis. It just takes one broadcast on the Internet for Air Deccan
to announce its fare for a particular flight on a particular day, and this is immediately
picked up by passengers who are constantly tracking the company's website for lower
fares. As the departure time of a flight comes closer, if the flight is relatively empty, the
airline can offer a special fare to enthuse potential customers to go for the special fare.
Legacy airlines cannot do this due to a lot of system rigidities. In their case, fares have to
be announced to thousands of travel agents worldwide via Galileo or Saber on-line
reservation systems and they in turn have their own reaction times, making the
implementation of dynamic fares relatively more challenging. By a similar Internet based
technology, Air Deccan can monitor the profitability of every flight. All revenues and
costs of every flight are calculated on a real-time basis, giving concerned managers a
flight-by-flight pulse of the airline's top and bottom lines, facilitating dynamic decision-
making.

Air Deccan incurs 7-8% costs on ticket sales, while competitors incur between 25 and
28%. The higher percentage of selling costs in the case of legacy airlines are due to
higher travel agent commissions, cost of credit, printing regular airline tickets, etc. A
typical large legacy airline can have outstanding payments from its global network of
travel agents of over Rs. 10,000 mn (over US$200 mn) at any given time. This leads to
enormous costs of funds, reconciliation issues with travel agents, need for a battery of
accountants to do this reconciliation, as well as need for physical reconciliation of airline
ticket counterfoils. All this is obviated in the case of Air Deccan, where the ticket is only
a printout from the Internet, which the passenger or travel agent is expected to download.
Currently, over 2,800 travel agents vend Air Deccan tickets. All ticket sales ultimately
converge on the Internet. The airline has not issued a single paper ticket. The airline's
average daily sales are in excess of Rs. 15 mn (US$300,000) and fast growing. All the
revenues from these sales flow instantly into the airline's coffers as cash, since the airline
does not offer any credit to travel agents.

There is another unintended benefit of this system. The penalty to a passenger for
cancellation of an air ticket has been traditionally low all over the world. Since the
booking of tickets in the legacy airlines is done by credit extended by the airline to the
travel agent, and likewise often from the travel agent to the customer, a passenger may be
tempted to hold multiple tickets on different flights for a segment, so that s/he is not
deprived of the ticket at the last minute, should s/he desire to travel. For the airline, this
can be a nightmare, resulting in some flights ending up traveling light due to a lot of last-
minute cancellations, or conversely, flights going overbooked, and the airline having to
handle and accommodate irate passengers. This is not so in the case of Air Deccan, where
the payment is upfront, and the penalty for cancellation of a ticket is considerable.
* Under the Dynafares scheme, the airline opens bookings for any flight 90 days in
advance with a starting fare of Rs. 500 (US$10) (plus taxes). This has been extended to
days before the date of flight departure. The fares keep moving up closer to the date of
departure.

* Air Deccan resorts to extensive outsourcing of non-core activities that helps in its cost-
containment strategies. Given that Air Deccan operates out of many small airports, the
traffic levels are very low. In many of these places the company may have just one flight
a day, requiring ground crew to work for a couple of hours a day. It does not make sense
to have its own staff there and keep them idle for most of the day. It is here that
outsourcing is a very effective way of controlling costs.

* In some of the areas like aircraft overhaul or repair, the company has subscribed to
schemes such as 'fly by the hour' offered by specialist third party agencies that keep
spares, etc. and take responsibility for the overhaul and repair activities. Air Deccan only
pays a pre-agreed charge, akin to that of an insurance policy. The company however
keeps its own staff for the routine day-to-day maintenance.

Innovative ways of containing costs on maintenance, by sending approved tools,

approved personnel, having access to an aircraft hangar, etc., to various local airports and
obtaining the approval of the Director General of Civil Aviation (DGCA) for the same
rather than having to fly the aircraft to the home base as most airlines in India do.

POSITIONING

Air Deccan's current target is the middle class and the lower middle class of the Indian
population. Captain Gopinath is convinced that Air Deccan can provide the alternative to
road or rail transport commuters, as well as corporate staff like sales executives. When
asked whom he considered as his customers, Captain Gopinath has this to say: "It is not
the elite that I consider as my customers. It is the humble cleaning women of my office,
the auto-rickshaw driver and other such people that we would like to cater to. We want
them to dream that they too can fly, and we want to make that dream happen. Those
people from the more elitist section of the society who come into our aircraft and
complain that the person on the neighboring seat appears to be from the 'poorer classes'
are not my target customers. May be, this gives me an idea. I may reserve a few seats in
the front rows of the aircraft and charge such people who are conscious of who their
neighbors are, a premium!' Even Azim Premji, one of the country's wealthiest persons,
who is the visionary, parsimonious Chairman of Wipro, has traveled by Air Deccan
providing a solid endorsement to the value provided by low-cost airlines."

NO-FRILLS

Air Deccan, like all low-cost airlines, follows a 'no frills' approach on all its flights. Seats
on its flights can be booked through the Internet. There are no in-flight services like other
commercial airlines but one can buy food or a drink on-board. All seats are economy
class and there is no prior allocation of seats. The airline offers its cabin crew a 10%
commission on all beverages and food that they sell to passengers on the flight. Usually a
single stewardess manages the aircraft cabin and sells snacks to the passengers for a
price.

REVENUE OPTIMIZATION

The company has implemented a number of innovative measures to maximize its

revenues. Its Airbus 320 carries 180 passengers against 154 carried by Indian Airlines. It
has no executive class and uses space on the aircraft frugally, leading to a straight 20%
advantage over its competitors in terms of enhanced seating capacity. Turnaround time of
Indian Airlines' (IA) Airbus is 50 minutes while for Air Deccan it is 30 minutes. This
allows Air Deccan to keep its aircraft in the air for up to 12 hours a day against lA's 9
hours. The turnaround time for Air Deccan's ATRs is 15 minutes and can be reduced
even further. The aircraft are used as an advertising medium and generate revenues of Rs.
200 mn per year at current levels (The airline currently makes about Rs. 2 mn a month on
each Airbus aircraft through advertisements). It sells advertisement space on seats, cabin
interiors, as well as on the body of the airplane. There are also plans to introduce in-flight
entertainment in the form of news, music and movies for a price.

VALUE PROPOSITION TO THE CUSTOMER

Through sophisticated software, the company is able to offer.value to its price-seeking

customers through price differentiation based on the time of purchase of the ticket. While
a legacy airline charges about Rs. 12,000 for a flight from Bangalore to Delhi, Air
Deccan charges from Rs. 500 to Rs. 2500 for the 'very early birds,' with the caveat being
that there are a maximum of 40 seats on offer in this 'bucket' on any given Airbus flight.
The other 140 sears are sold at prices ranging from Rs. 3000 for someone who purchases
the ticket considerably before the date of the journey to Rs. 6500 for a ticket purchased
on the day of the flight. In any case, it is a great value proposition for the passenger, not
withstanding the Apex fare offers on the other airlines like Jet Airways, Indian Airlines
and Sahara (Exhibit 2). These airlines have been so miffed at pressures to lower fares as a
consequence of Air Deccan changing the prevailing paradigm that they have issued
informal instructions to their staff not to provide any sort of cooperation or assistance to
Air Deccan at the airports, leaving the latter to largely fend for itself.

CHALLENGES AHEAD

Sitting in his spartan cabin in the modest Air Deccan office in Bangalore, Captain
Gopinath reflects: 'The key to the success of Air Deccan in the initial years has been the
very hands-on approach of the top management of the company with absolutely no
reliance on consultants. Quick implementation of new ideas has been another key
strength. The core team is intimately involved in the day-to-day running of the airline. A
strong ideology is what drives all of us here. What gives us satisfaction is to see a taxi
driver in Mumbai or other similar people of modest means on our flight, when they make
their annual trip to their distant villages across the country. In the past, their only hope
was to get there by train, spending two days to get there in the hot summer months, often
in an overcrowded compartment. Taking a flight was not even in their remotest scheme
of things, and if asked why not, they would most likely have said that such luxuries are
only for the 'sahib log (read 'rich people'). Now if they plan well in advance, they can
travel to their home at less than the cost of a second class train fare, and get there in a few
hours. We are gratified to see that over 30% of passengers on most of our flights are first-
time travelers. We have thus succeeded in breaking the glass ceiling as far as air travel is
concerned in this country. There is a perceptible change in the profile of an air traveler
today, if you visit any of the airports we fly. This has necessitated us to make some
significant changes, such as making announcements in local languages and not just in
English or Hindi. Our advertisements appear in the most unlikely places for an airline,
such as in a railway station or in local language newspapers.'

'What is my vision? To enable any Indian who wants to fly to be able to do so. In the
advanced countries, any one who wants to fly can do so without a second thought. If we
are to become a developed nation, we must make this happen, and Air Deccan is
heralding this change.'

Commenting on how he sees the future of his airline, Gopinath says-'We have come a
long way from a single aircraft operator to now having 15 planes in just one year's time.
We now operate over 100 flights a day! This is the highest growth in civil aviation
industry anywhere in the world. So long as financial management continues to be sound,
as it is today, there should be no stopping of the company's further climb. It may stabilize
from the current revenue level of Rs. 15 mn per day (Rs. 5000 mn per year) to a level of
Rs. 20,000 mn in two years. At that level, it will be comparable in terms of passengers
flown, to Jet, which is today India's leading airline; with sales of Rs. 40,000 mn. IA has
revenue of Rs. 32,000 mn per year and Air Sahara Rs. 20,000 mn per year. In five years,
we see ourselves as the largest airline in the country. Given that India has a population of
1.2 billion and a 'per capita aircraft density' that is a tiny fraction of a percent of what it is
in the developed world or even of countries such as China, there should be no stopping us
from the demand perspective. Emergence of new competition including other low-cost
airlines is good for the industry as a whole, so we are not unduly worried about it.'

Air Deccan today operates 75 flights a day to 22 destinations with a current fleet of three
Airbus 320 aircraft and seven ATR 42s. This number is fast growing. It plans to add 30
more ATR aircraft to its fleet, in addition to the mega-deal announced with Airbus
Industries, Europe, for the delivery of thirty A320 aircraft. The company plans to operate
a fleet of 30 Airbus aircraft and over 30 ATR aircraft within the next five years. Air
Deccan plans to divest 20% of the promoters' stake to raise fresh funds in order to expand
its fleet and its coverage of the Indian airspace. With a view to raise additional resources
to fund the company's aircraft acquisition and capital expenditure plans, the company
seeks to raise over US$40-60 mn by divesting "up to 26%" of the equity stake in the
company. Several institutional investors, including some from overseas, have already
placed their bids for the same.

According to Capt. Gopinath, 'while much has been achieved by us in the last few years,
the challenges ahead are many. We must continue to stay focused on our vision and not
get strayed from it in the lure of short-term gains. Given that we are growing at such a
fast rate, like never before experienced in the aviation industry across the world, how do
we transmit this vision to our growing number of employees? The airports in the country
have antiquated facilities. Even simple things like getting a hanger in a major airport
requires Herculean effort and it can take forever to get. Getting the right people in
adequate numbers is not going to be easy. Remember that other airlines too are also
growing fast, and many new entrants are also eyeing the Indian market, both in the legacy
airline sector and the low-cost sector. And there are only so many of pilots, engineers and
other highly skilled people the country churns out. Where do we get enough of
disciplined people who will join us and stay with us for the long haul, given this
scenario? To cope with our growth, we have been inducting people with these skills from
neighboring countries, at considerable additional cost.'

'Unlike in the advanced countries, the country's policies relating to civil aviation are
archaic. Air travel has for long been seen as a luxury. Consequently, there are enough
numbers of airline-baiters among politicians. This results in policy swings with each new
government that comes to power at the center. For instance, minor changes in taxation on
jet fuel can have significant impact on our profitability (Exhibit 5). The escalating cost of
oil globally is a cause for worry. In India, not so long ago, we have been used to the
quieter times with an aircraft landing or taking off once every thirty minutes or more,
even in the 'busy' airports like Mumbai. We are now not far from reaching the situation
that prevails in many developed countries where the planes land and take off in quick
succession. Is our air traffic agency geared to this increased traffic?'

'Limited infrastructure in the airports, such as runways results in planes having to wait in
long queues for both landing and take-off. The implications of this on costs and customer
satisfaction are obvious. And of course as a country, are we geared to the new
responsibilities all this puts on the system as a whole for safety?'

'While the challenges are many, and we have crossed many hurdles in the past, I am sure
we will continue to grow as we have been doing and be a force to reckon with in the
Indian civil aviation industry. We consider that our market size is 1.2 billion Indians.
Even with ten more airlines, we will only be scratching the surface of potential demand!
Besides, a powerful vision drives all of us here at Air Deccan.'

TEACHING NOTE

USE

We designed the "Air Deccan: Revolutionizing the Indian Skies" case for use in a course
on Entrepreneurship or Strategy in either an MBA or Executive Education Program.
Instructors can use the case to illustrate how an entrepreneurial mind works. Additionally,
now that Air Deccan is a reality, the case can also be used to discuss the challenges ahead
and the strategies that the company should come up with for the future. Essentially,
students must address a host of issues relating to entrepreneurship and strategy.
We provide background information on the company including considerable background
of the entrepreneur, Captain Gopinath, whose dream is to make 'flying : affordable for
every Indian.' Students must review all of the diverse information I presented in the case,
identify the elements of a successful entrepreneur and then move on to identify and
prioritize the challenges ahead. They should then come up with effective strategies to
ensure continued success of the company.

SYNOPSIS

With daily sales in excess of Rs. 15 mn, and growing steadily, Air Deccan has redefined
the paradigm of air travel in India. Until the launch of Air Deccan, air travel was
essentially meant for the affluent sections of the society, due to the high pricing
structures. Air Deccan has transformed the aviation landscape in the country. Today, air
travel, if planned well in advance, is often cheaper than travel by second-class train.
While there are many low cost airlines the world over, especially in the USA, Europe, Far
East and Australia, the challenges of replicating this in India were not trivial. Three
powerful established players (Indian Airlines, Jet Airways and Sahara) were not amused
with this upstart airline and with their deep connections in the political and bureaucratic
system of the country, wanted to scuttle the start-up airline. This case is one of intense
constancy of purpose and extreme tenacity of the main promoter of the venture, Capt.
Gopinath. Despite heavy odds, including lack of finances, he and his team came up with
creative solutions at every step, to overcome the hurdles. His entrepreneurial style
warrants close study to draw out useful lessons for any aspiring entrepreneur.

However, it is fair to say that while the progress has been spectacular, challenges abound.
Issues relating to the continued growth and success of Air Deccan require a clear
strategy. This can be the focus of the second part of the case discussion.

CASE PREPARATION QUESTIONS

1. What are the lessons you can pick up from the launch of the entrepreneurial venture by
Captain Gopinath?

2. While low cost airlines are not new to the world, Air Deccan was clearly the
torchbearer of this concept in India. What additional challenges did Captain Gopi have to
contend with vis-�-vis a low cost operator in the advanced countries?

3. Develop a business model for Air Deccan.

4. Going forward, what are the challenges that the company has to grapple with?

5. What should be the strategy of the company?

ANALYSIS OF CASE QUESTIONS

It is difficult to have right or wrong answers to the case questions. The purpose of this
case is to make the students immerse themselves into a start-up company and come out
with lessons. In this sense the case is fairly open-ended, giving ample scope for students
to explore in-depth the areas of entrepreneurship and strategy in the context of the case.

To have maximum learning, it will be useful to get the participants to read some or all of
the suggested chapters in the Reading List that follows this section.

Ideally this case should be preceded by 3-4 hours of work by participants, who should be
formed into teams of four to six persons each.

1. What are the lessons you can pick up from the launch of the entrepreneurial venture by
Captain Gopinath?

The case is replete with illustrations of how Captain Gopinath crafted the company from
scratch. He went on a 'boot strapping' mode, which is the hallmark of a successful
entrepreneur. The constancy of purpose, focus and humility are evident. His ability to
sense opportunities from chance encounters (such as a visit to the USA or the Southeast
Asian countries) are out of the ordinary experience. These and many other qualities are a
'must have' list of qualities of a successful entrepreneur. Anyone aspiring to succeed in an
entrepreneurial venture will do well to emulate these qualities, among others. The class
may be encouraged to extract all the various qualities of Captain Gopi that have made
him successful.

2. While low cost airlines are not new to the world, Air Deccan was clearly the
torchbearer of this concept in India. What additional challenges did Captain Gopi have to
contend with vis-�-vis a low cost operator in the advanced countries?

A precursor to this discussion that would be useful is to draw out challenges of setting up
and operating a low cost airline anywhere in the world, including in advanced countries.

Setting up and successfully operating a low cost airline is a challenge in the best of
circumstances, even in the advanced countries. In India the challenge is considerably
more. The case is embedded with a lot of subtle factors that make the challenge of setting
up and successfully running a low cost airline in India even more of a challenge, than it is
to do in the advanced countries. Participants may pick up these aspects, and in fact debate
on whether it is easier or more difficult to pull off such a venture in India vis-�-vis the
advanced countries.

3. Develop a business model for Air Deccan.

A detailed explanation of the components of a business model is presented in Chapter 3

of the book 'Leading the Revolution by Gary Hamel (reading No. 5 in the following). It
will be useful if the students read that chapter, and then develop what they see as the
business model of Air Deccan. A team of students can be asked to present their model,
while other teams may comment on it.
4. Going forward, what are the challenges that the company has to grapple with?

The challenges that the company has to face are now only beginning. In the initial stages
of the company, many of the established players (Indian Airlines, Jet Airways and
Sahara) would have trivialized the company and not expected it to reach the level it has
reached now . Suddenly, the company has appeared as a big dot on the radar screen of
these well-established players. The existing paradigm is that running an airline requires
large funding, something that Captain Gopinath lacked. Hence, the existing players
would have concluded that this venture was bound to fail. However, there was a lot of
entrepreneurial creativity (Questions 1 and 2) manifested by Captain Gopi that helped
him make his dream a reality, and today Air Deccan is a force to reckon with. Besides,
many other 'me too' low cost airlines are already on the anvil. The Government and the
realities (case Exhibit-6) are also things to reckon with. Participant teams may identify
other challenges as well. How Captain Gopi and his team will deal with all these
identified challenges will make observation interesting.

5. What should be the strategy of the company?

This is a fairly open-ended question. Participants may read one or more of the three
references for this question (Readings 2, 3 and 4) and present the strategies they come up
with. A neat exposition of how to do this at a business level is presented in Reading No.
3.

READINGS

1. Harvard Business Review on Entrepreneurship, Harvard Business School Press.

(Chapter-7: Bootstrap Finance: The Art of Startups, Amar Bhide, page 149-174; Chapter-
1: The Questions Every Entrepreneur Must Answer, Amar Bhide, page 1-28; Chapter-3:
How Entrepreneurs Craft Strategies that Work, Amar Bhide, 57-88; Chapter-4: How
Much Money does your New Venture Need, James McNeill Stancill, 89-116) [for
Question 1].

2. Strategy Safari: A Guided Tour Through the Wilds of Strategic Management, Henry
Mintzberg, Bruce Ahlstrand, Joseph Lampel, The Free Press, 1998 (Chapter 5: The
Entrepreneurial School: Strategy Formation as a Visionary Process) [for Question 1 and
2]

3. The Strategy Concept and Process: A Pragmatic Approach, Arnoldo C Hax and
Nicolas S Majluf, Prentice Hall, 1996 (Part-II: Business Strategy, Chapters 3 to 8, Pages
43-183) [for Questions 2, 4 and 5].

4. The Strategy Process, Henry Mintzberg, James Brian Quinn, John Voyer, Prentice
Hall, 1995 (Chapter 9, Structure and Strategy in Entrepreneurial Organisations) [for
Question 5].
5. Leading the Revolution, Gary Hamel, Harvard Business School Press, 2002 (Chapter
3: Business Concept Innovation) [for Question 3].

WHAT HAPPENED

The company, as of June 2005, is growing from strength to strength. Captain Gopi and
Air Deccan are regularly featured in the various media in India as having ushered in the
democratization of air travel in India. The company is bullish about the future. Several
companies are seeking to emulate the Air Deccan model. The three established airlines
are under constant price pressure from these low cost operators. The overall scenario is
fairly dynamic as of now and experts expect considerable churn to take place in the
coming years. Students may be encouraged to study the websites of the various airlines in
the country and report back on how they have fared since the writing of the case.