Mumbai: Go Airlines (India) Ltd, the operator of GoAir, plans to fly on regional routes under the government’s regional connectivity scheme and is exploring a partnership with a regional airline for it, Wolfgang Prock-Schauer, managing director and chief executive said in an interview on Thursday.
The Mumbai-based low-cost airline also plans to acquire 13 A320neos taking the total number of planes to 37 by the turn of the current fiscal. It’s also set to commence international operations by year end. The plans to fly overseas, Prock-Schauer said, have been delayed by eight months due to the delay in delivery of aircraft by Airbus SAS. To some extent, it has also held back the firm from going for an initial public offering, he said.
Prock-Schauer said though the regional connectivity scheme has potential, GoAir will not buy smaller aircraft to serve the regional routes and will remain steadfast to its existing business model. “We wouldn’t want to take any risk. I want to stick to the business model, do what we can with the A320neos," he said, pointing out that there are some regions, though limited in number, that can be served with A320s. Meanwhile, GoAir has also held preliminary discussions to team up with a regional airline, he added.
GoAir’s strategy of serving regional routes with A320, is different from the strategy of its low-fare rivals Spice Jet Ltd and InterGlobe Aviation Ltd. Both plan to acquire smaller planes for addressing the regional routes. On Tuesday, SpiceJet said it has placed an order to buy 25 Bombardier Q400 aircraft with an option to add 25 more. Earlier this year, Indigo, India’s largest airline by passenger flown, said it plans to buy 50 ATR aircraft and float a new regional subsidiary.
GoAir has been fairly conservative on scaling up its business and the strategy has paid off, said an analyst at a domestic brokerage who declined to be identified. “They have managed their costs well and been profitable," he said. He however, added the airline’s plans to address shorter routes by A320s or partnering with a regional airlines may not be viable.
On 31 March, five airlines including Air India, SpiceJet, Turbo Megha, Air Odisha and Air Deccan got licences to operate on regional routes under the government scheme to boost regional air connectivity. Licences for the second phase are set to be awarded in September.
Prock-Schauer said the commencement of international operations which has already been delayed, tops his priority. He declined to comment on details of its overseas expansion. The Gulf, South-East Asia, Central Asia and China are some of the destinations on the airline’s radar for operations on international routes, Mint reported on 23 May.
Indirectly, the delay has also had an impact on company’s plans to go for an IPO. “It makes a difference if you are 40-aircraft airline versus 23-aircraft airline," he said.
With the addition of more fuel efficient A320s in its fleet by the end of this fiscal, Prock-Schauer expects to reduce the airline’s fuel costs by half. Though most of the aircraft will be narrow-bodied, the contract has scope of the airline upgrading to wider bodied A321, he said.