Gopinath expects cargo biz breakeven in 18 mths

Even in a market where trade is subdued, Captain GR Gopinath expects his new cargo venture, Deccan Cargo & Express Logistics Pvt Ltd, operating under the brand Deccan 360, to become profitable in the first 18 months of operations.

The company expects revenues of $50-70 million in the first year of operations.

The first service, connecting Delhi-Mumbai-Chennai-Hong Kong, will be launched at the end of the month and the second service will connect Dubai to the network.

Deccan 360 is launching the domestic and international routes simultaneously. “To get a lower cost space, we are flying more number of hours and hence are flying to Hong Kong and Dubai,” Gopinath said.

Gopinath had founded India’s first low-cost carrier Air Deccan, which was later acquired by Kingfisher Airlines Ltd. The initial investment into the cargo venture was $25 million, which was provided by promoter equity. The company, however, is assessing term sheets from investors to raise another $30 million.
Deccan 360 plans to take the franchise route to build the network of express logistics.

“We are talking entrepreneurs across the country and will have more than 100franchises by the end of this year,” said Jude Fonseka, chief executive officer, Deccan 360.

The franchises will provide the first and the last mile delivery (pick up and drop) to Deccan 360 customers and connect 30 cities by October this year and 75 cities by next year. Till the company sets up its franchise network, freight forwarders and courier companies will provide the cargo in the initial months.

Deccan 360 will deploy 3 leased Airbus 310 aircraft in the first two months of operation with 2 smaller turboprop planes made by Avions de Transport Regional (ATR) joining the fleet by October.

“We are almost doubling the Indian cargo-carrying capacity just in the first phase and will be utilising all the capacity that we deploy,” Gopinath said. Deccan 360 will add 105 tonnes capacity in the first phase with each of its A310 aircraft carrying 35 tonnes of cargo and ATRs’ 5 tonnes each.