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Mumbai, Sept. 22: Deccan Aviation Ltd, the holding company that operates low-cost airline Air Deccan, has suffered a loss of Rs 340 crore on an extended financial year of 15 months ended June 30 — raising serious questions about the feasibility of the business model in Indian skies.

The company, which also operates a private helicopter and air-plane chartering service, has posted revenues of Rs 1,352 crore for the fiscal period April 2005 to June 2006.

The low-cost airline had suffered a loss of Rs 20.85 crore for the 12-month period ended April 30, 2005. The company’s loss has ballooned to Rs 226.49 crore for the 12 months ended April 30 this year, an increase of over 986 per cent.

According to Deccan Aviation, the financial performance for the period was impacted by various factors, including the increase in fuel and other input costs.

The introduction of 20 new aircraft, the addition of 56 new routes and rising personnel costs also put pressure on profitability.

Air Deccan emerged as the second largest airline with a market share of 21.2 per cent in June.

However, it now has the dubious reputation of being the airline saddled with the biggest loss. Kingfisher Airlines, the other start-up airline, suffered a loss of around Rs 180 crore last fiscal and is projecting to close this year with a loss of about Rs 140 crore.

Mohan Kumar, Air Deccan director (finance), was unfazed by the losses and said the benefits of higher yields on newer routes, which account for over 58 per cent, would flow in the next quarters.

“We have witnessed a robust growth in our seat factor averaging 85 per cent in the peak seasons. Also new routes take a year to mature and start giving optimum yields,” said Kumar.

“We are also working on innovative financial structures which will strengthen our finances and support our growth strategy, especially over the next 8 to 12 months which will see fierce competition with the entry of new players,” said G.R. Gopinath, managing director of Deccan Aviation.

The company has also signed a term sheet for additional $100 million. The board has approved the same and documentation is under process.

The scrip, which went through turbulent times during the initial public offer period, today settled at Rs 101.45, down Rs 2.45 or 2.27 per cent on the National Stock Exchange.

The shares were issued at Rs 148, while the price band was Rs 146 to Rs 175.