GoAir moderates growth plans owing to rising fuel price, shortage of pilots

GoAir moderates growth plans owing to rising fuel price, shortage of pilots

New Delhi, Jun 11: Wadia group-owned airline GoAir has realigned its growth plans owing to rising fuel price, troubles with new plane engines and shortage of pilots.
The airline has charted a modest expansion in the world’s fastest-growing aviation market and is simultaneously looking to lease out some of its old planes, as fuel cost is hurting profit.
According to sources, GoAir had appointed an external consultant to realign its network planning, following which it has decided to maximise frequency on the profitable metro to non-metro routes rather than adding new destinations.
It has also pushed its international foray to Maldives and Phuket to September, which was suppose to start last year. Recently, the airline has revamped its entire senior management with a new chief executive officer, chief operating officer and chief commercial officer. A GoAir spokesperson didn’t response to detailed queries on the airline’s strategy.
“The taxation on jet fuel is the highest in India. Airlines cannot grow their operations in the prime Delhi, Mumbai routes where it can make money and the potential of good yield is very limited in airports outside the metros.
So, for a short period, we have decided to concentrate on where our strength lies. Expansion will be there but it will be controlled and will focus on increasing flights at all price points and time,” said a senior airline executive.
The spike in fuel cost has also forced the airline to plan leasing out its old A320 Ceo aircrafts to save fuel and earn additional revenues. This is another factor behind GoAir’s capacity adjustment move as the airline plans to use new deliveries replacing its old A320 fleet. The A320 Neo offers 15 per cent fuel saving over the conventional A320 planes.
People familiar with developments said the company was in discussions with airlines in Vietnam and Cambodia to sublease seven of its old A320 planes.
These planes, which were supposed to be returned to the lessor between 2021-2023 according to the original schedule, would be leased out soon if negotiations are successful. “If there is an opportunity to return some of our older planes, we will do it but this will not be at the expense of growth. We can’t shrink to hit profitability.
Sub-leasing of planes will only happen if aircraft deliveries are normalised and engine issues are sorted,” another airline executive said.
Currently, GoAir has grounded three aircrafts because of engine problem and the company is operating with 32 aircrafts.
While the airline had a plan to induct 24 Airbus A320Neo planes in 2018-19, the actual number of deliveries may be lesser as Airbus and Pratt & Whitney (PW) are rectifying engine issues. A recent Bloomberg report said Airbus would have around 100 A320Neo aircrafts by the end of June without engines and these form a part of its aircraftmaker’s global order book. Queries sent to Airbus and PW spokesperson didn’t elicit any response.