Better known as the father of low-cost airlines in India, Captain G R Gopinath who last year sold off majority stake in erstwhile Air Deccan to Vijay Mallya-owned Kingfisher Airlines has always been taking risks. From quitting his job in the Air Force to successfully running chartered flights for years to introducing low-cost carrier Air Deccan to masses, he has now embarked on a venture of launching Deccan360, a long-haul freight service across multiple industry verticals offering domestic as well as international express cargo services to freight forwarders. In an interaction with FE?s Shaheen Mansuri, Bangalore-based Captain Gopinath, chairman of Deccan Express Logistics, shares his plans of making it big in the cargo sector. Excerpts:

You have launched Deccan 360 at a time when the economic scenario is very challenging. What will be your strategy to succeed in these tough times?

This is the right time. Air Deccan was also launched at a time when the aviation industry was facing its worst slowdown post 9/11. At that time, 13 million travellers flew, which constituted only 1% of Indian population. In four years, we reached out to 67 cities. Even amidst general recession I see opportunity for my cargo and logistics services today. At present, foreign freight carriers are operating, but they are allowed only to bring cargo from outside the country but not within the country. We are looking at that market.

How much is your current investment in the venture and how much capex have you planned?

The venture has been set up with an initial investment of $25 million. The company would require another $30 million to scale up operations. We are not only developing a hub-and-spoke model in Nagpur but have also signed a memorandum of understanding with the GMR Group for setting up express cargo operations at Delhi and Hyderabad airports, which along with the hub in Nagpur will form an extensive multi-modal storage, transportation and delivery network.

What will be the fleet size?

Initially we will deploy three Airbuses and by September will induct two ATRs, which will take our capacity to 120 tonnes. However, in global context this capacity is abysmally small. The capacity is only 150th of what Europe has.

But gradually we want to reach the remotest part of the country. I believe wherever logistics goes, industries are driven there. We want to drive industries to these regions. Starting this month-end, our freighter service will span across multiple industry verticals such as automotive spare parts, textiles, pharmaceuticals, machinery and heavy equipment, banking and organised retail.

What will be the connectivity like initially?

The first service would cover New Delhi, Mumbai, Chennai, Hong Kong and Dubai. These account for 85% of India?s $1-billion cargo business. Cargo business in the country is growing 20% per annum.

Will you keep the model low-cost for your logistics venture as well?

I will follow the same model as I did in Deccan, outsource most of the work.

In Deccan, when I opened a new station, I outsourced operations and that is why I could expand my network so fast.

Similarly, I will franchise out trucking and warehousing operations amongst others, which will reduce costs and help to scale up.

What is the biggest challenge facing the low-cost carrier industry in India?

India has a good emerging economy, but if the government does not invest in infrastructure, growth will be slow. The demand is there and funds are there and the government has realised that aviation can no longer be a peripheral activity. Aviation has to be central to government planning or else we will not have uniform economic growth. While kind of infrastructure needs to be developed in parallel, industries will not go where there is no air connectivity. For instance, after the launch of Air Deccan, we have had engineers, doctors, business heads visiting smaller towns, some with plans to invest.

Given an opportunity, would you be interested in starting a low-cost carrier again?

As per the agreement with Kingfisher, I have an option to buy 10% equity in any domestic carrier. But right now I am focusing on cargo and, of course, the dream to launch a low-cost airline is there.

You contested elections as an independent candidate from the most prestigious constituency in Bangalore. How do you plan to manage business and politics? (This interview was done before the election results.)

Unlike other politicians, politics is not full time business for me. I will devote three-four hours a day to look into governance and legislative issues. I have formed a citizen forum, which is actively involved in pressing issues. I can manage both.