Indian low-fare carrier Air Deccan has reported a sizeable net loss for the first reporting period since it became a publicly traded company, throwing the country's massive low-cost airline boom into doubt.
The carrier says in a statement to the National Stock Exchange of India that it suffered a net loss of Rs3.4 billion ($74 million) for the 15-month period between 1 April 2005 and 30 June 2006. It recently changed the end of its financial year to 30 June from 31 March.
No comparable earnings figures are provided by Air Deccan, which became a publicly traded company in June after an initial public offering that raised far less than expected.
Total sales amounted to Rs13.5 billion during the 15-month reporting period, while total expenditure amounted to Rs16.2 billion.
Fast-growing Air Deccan introduced the no-frills concept to the Indian domestic market in 2003 and it now claims a local market share of more than 20%, making it the second-largest domestic airline after full-service operator Jet Airways.
It originally hoped to break even in the current financial year but executives are quoted in the local media as saying it now does not expect to post profits until 2008 as a result of intense competition following the launch of several other new airlines.
Air Deccan has 62 A320-200 and 27 ATR 72-500s on order and other airlines have large outstanding orders, largely for Airbus and ATR types. Aviation analysts says India's infrastructure is inadequate for the massive expansion in services planned by the start-up airlines, leading to speculation that European manufacturers may suffer if Indian faces overcapacity. Aside from Air Deccan, Kingfisher Airlines has 70 aircraft on order, including 33 A320s and 16 ATR 72-500s and 33 options. Spicejet has 19 737 Next Generation on order and Indigo Airlines has 100 Airbus A320-family aircraft on order. Meanwhile, Easy Air has yet to secure aircraft but has been speaking to Airbus and Boeing about A320s and 737-700/800s.