Home / Companies / People /  ‘This is an ideal time to invest in low-cost airlines’

IPO-bound Go Airlines, which recently rebranded itself as Go First to focus on the ultra-low-cost carrier (ULCC) model, expects a boom in the travel sector post the pandemic. In an interview, Ben Baldanza, vice chairman of Go First, said he expects the initial public offering (IPO), which will shore up the airline’s finances, address liabilities and help the airline reposition itself, to be completed by the year-end. Edited excerpts:

Why plan for an IPO at a time when the aviation sector has been one of the worst hit by the coronavirus outbreak?

The IPO is a long-term plan. I do feel that it’s a good time to invest in low-cost airlines. People’s views on risk have changed and more people around the world are working from home. So, while there may not be a lot of investor interest in long-haul airlines that focus on corporate business travellers, there is definitely a lot of interest in LCCs (low-cost carriers). As investors recognize that people are tired of being shut in, we believe that there is going to be a big travel boom after the pandemic. The IPO will place us perfectly when the market rebounds.

Why did the airline, already a no-frill carrier, rebrand itself as an ULCC?

We believe that by branding ourselves as an ultra-low-cost carrier, we can position ourselves to be different from others. Go First will be a very high value carrier for the consumer. That means we will fly mostly point-to-point services. We will target both business and leisure customers. The beautiful thing about this model is that it provides customers with what they most want, for instance low ticket prices. Our business model will, however, not be to attract corporate flyers or high value customers like some of our competitors but will on-board young Indians who want to travel for leisure or to meet small business needs.

How will this be different from the current LCC offerings?

Over the next few years, we will provide more choices for our customers. We will give them more flexibility, more control over the total price they pay. We will be working with them to not only sell air trips but also the complete experience. For instance, if our customers are travelling to Goa or Srinagar, we will help them with hotels and (tour) packages. This way we will make more money than our rivals flying on the same route, as our costs will be lower.

Go Airlines has deferred and delayed lease rental payments, fuel dues because of the ongoing pandemic. Lessors have issued default notices and could repossess aircraft. How will you address such concerns?

Every airline around the world has been negotiating with lessors and other vendors to delay payment or defer payment and reduce the cash burden at a time when flying is not high on the agenda. Our plan is to remain solvent and available to fly again when covid is controlled. Meanwhile, we have very strong promoters (the Wadia Group) who will continue to infuse funds. As the airline is able to fly again (normally), it will generate cash needed to pay off all its bills.

Any plan to delay or cancel part of the order placed with Airbus SE for A320 planes?

There is no plan to cancel the order with Airbus. We may defer or delay delivery but we will not cancel orders. We have a lot of airplanes coming in the future and we will take delivery of all of them as we are expected to grow significantly in future.

How long will it take for domestic aviation to bounce back?

This is difficult to say at the moment. We could be looking at another 6-12 months before the domestic sector is really active and strong again.

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