Rs 500 airfare from Bangalore to Delhi! well actually, it's Rs 500 plus Rs 200 in taxes, but that is what Captain G.R. Gopinath, MD, Air Deccan is promising will be the lowest available fare on this sector when he starts flights in the last week of this month. Nine months after his dream of running an airline finally took flight, Gopinath is now taking on the big boys-Indian Airlines, Jet Airways and Air Sahara.

Air Deccan already operates 54 flights a day with seven ATR 42-500 aircraft, two recently acquired for the western region (nobody tells you these things these days, but ATR expands into Avions de Transport Regional, the Franco-Italian company that makes these aircraft). However, the big game is on the trunk routes such as Delhi-Mumbai, Delhi-Chennai, Delhi-Hyderabad and Delhi-Bangalore, which Gopinath will cater to with Airbus A320 aircraft. Air Deccan will fill the planes with 180 seats-over 40 more than competitors. "We will have more seats, more flying time, and faster turnaround, the three mantras of low-cost carriers", Gopinath says.

Gopinath expects the average traveller to pay around Rs 6,000 for a Delhi-Bangalore ticket, with the peak price touching Rs 8,000. This compares to Rs 10,300 for the same sector on an Indian Airlines or a Jet Airways. "We will give nothing for free, not even water. If you want in-flight entertainment you pay for the headphones."

Rough-very rough-calculations on aircraft operating costs show that Gopinath might make some decent money, after all. It costs around Rs 1.75 lakh per hour to operate an A320 series aircraft; at Rs 6,000 a ticket, Air Deccan will make almost Rs 11 lakh per flight with 180 passengers. But there are those overheads too, admittedly lower for no-frills airlines, but they're overheads nevertheless. One additional revenue stream Gopinath has in his quiver is advertising-it will cost an advertiser "around Rs 25 lakh" to put his logo on the side of an Air Deccan Airbus. He also lets on that he has got a "awesome deal" from Airbus on leasing rates and his planned purchase of at least two planes. Even though leasing costs are estimated to be around $150,000-175,000 (Rs 68.6 lakh-Rs 80.09 lakh) per month, Gopinath expects to be in clover.

The good captain hopes to have "at least five, if not seven" Airbus aircraft operating by April 2005. "We should make at least $125 million in revenues-this means I would have saved passengers over $125 million (Rs 575 crore) because I will be charging half the fare." Fuzzy logic perhaps, but surely food for thought for the higher-priced competition.

-Kushan Mitra

Realty Check

High Rise: ...but low prices

Take the low-interest rate regime, add to it a dash of housing finance options, mix it in a cauldron of fancier pay packages, and what do you get: Amongst other things, a surge in real estate demand, that's what. Prices in the high-end residential segment have surged 25-30 per cent, and Anshuman Magazine, Managing Director, South Asia, CB Richard Ellis, says the surge is driven largely by suburban areas (as against the heart of the city) in Delhi, Mumbai and Bangalore.

But the party may run out of steam soon. There's no danger of a crash, but a correction appears inevitable, says Magazine. Yet, the growth will still be significant. "On an average the residential segment is expected to grow between 7.5 and 15 per cent from hereon,'' points out Sanjay Verma, Joint Managing Director, Cushman & Wakefield (India). Commercial rentals, meantime, will stabilise, as new supply of some 20 million square feet is unleashed.

-Aditya Wali

Q&A
"We Want Faster Growth"

Thus spake Hans-Peter Klaey, President & CEO, SAP Asia Pacific.

What's the growth rate in India been like?

In 2003, SAP India saw 70 per cent growth. We want to see the Indian subsidiary grow 1.5 to two times faster than the Indian market.

How many customers do you have here?

We already have 600 customers in India and 1000 SAP installations. And 250 of these installations are in the small and medium businesses (SMBs) across industries. SMBs today want to be real-time enterprises. They want it (sap) to be implemented within a short period of two to four months. This gives them quicker access to the advantages of SAP and lowers their risks.

From which industries will growth come from?

We are exploring newer areas such as healthcare, higher education, transportation and ITEs. SAP has 28 industry specific solutions. The concept of an adaptive enterprise is picking up very fast in India. The adaptive supply chain network dramatically reduces business complexities.

-Swati Prasad

A Hurrah For Humanitarian Pricing
A study establishes that Cipla's anti-AIDS dosage works as well as its branded counterparts.

Cipla's CMD Y.K. Hamied: A shot in the arm

An article which appeared in the July 3 issue of medical journal The Lancet has resulted in a moral victory of sorts for Indian drugs major Cipla in the anti retroviral (anti-aids) segment. Cipla had broken new ground three years ago with anti-retroviral Triomune, a three-in-one, fixed-dose combination pill, available at less than a dollar a day to patients. The Lancet article details an independent study undertaken by 'Doctors Without Borders,' a global healthcare charity, and the University of Montpellier's Research Institute for Development in France, which established that Triomune works as well as branded drugs in the treatment of aids.

At a time when the United States government refuses to spend any part of the $15 billion anti-aids fund launched by President Bush on generic drugs-arguing that they are not as effective as branded anti-aids drugs-the verdict in The Lancet comes as a shot in the arm for Dr Y.K. Hamied, Chairman & Managing Director, Cipla, a staunch advocate of generics for the treatment of life-threatening diseases in developing countries. Triomune costs about $200 (or lower depending on the dosage) per patient per year, which is an astounding 30-40 times cheaper than branded drugs in the same segment. "The Lancet as an independent magazine has achieved something we could never have done. They have basically validated the drug in the face of protests from MNCs,'' says Hamied.

But don't expect this victory to have any earth-shaking impact on Cipla's earnings. "We sell these drugs at less than a dollar a day so the margins are not very high." says Joint MD Amar Lulla. "It's called humanitarian pricing," declares Hamied. "What we took into consideration whilst launching Triomune was safety, quality, efficiency, affordability, sustainability of production and predictability of demand." The Lancet study seals the case.

-Priya Srinivasan

DASHBOARD

THE AP-KA EFFECT
It's still early, but contrary to popular belief it is business as usual in Andhra Pradesh and Karnataka.

TEXTILES
Textiles could emerge as the biggest forex earner. Textiles Minister S. Vaghela expects investments of Rs 60,000 crore in five years.

EXPORTS
India's exports could surpass $200 billion soon, says a study by the economic advisor in the ministry of commerce.

INDUSTRIAL PRODUCTION
Cheap credit helps industrial production rise 7.5 per cent in April-May.