Soaring crude clips GoAir’s wings; airline halves operations

New Delhi: GoAir, promoted by the Wadia family, is emerging as the first Indian victim of the airline crisis, triggered by skyrocketing fuel prices. The Mumbai-based carrier has halved operations in a bid to cut losses. Industry sources say that GoAir faces a severe cash flow crunch and the turbulence could call for a bailout sooner than later.
When contacted, GoAir vice-president (marketing) Neeraj Kapoor said: “As the fuel price is going up sharply, one has to cut costs. We laid off employees at four stations as part of our plan to cut operating costs. We would do our best to run the airline and offer our customers best services.” An email with specific queries to GoAir did not elicit any response till the time of going to press.
While the company denies talk of a sellout, industry buzz has it that the Wadia family has to organise finances on a war-footing or face the worst. The low-cost carrier has cut its operations to little over 700 flights a month compared with 1,400 some time ago. As fuel prices continue to rule stiff, the airline has also handed out nearly 160 pink slips in a week, including seven on Wednesday. GoAir operates six A320 aircraft (four leased and two owned) and employs around 1,000 people across the country.
The airline is so starved for cash that it is selling Mumbai-Delhi tickets for around Rs 795 (plus taxes of Rs 3,325) compared with Rs 2,000 (plus tax) that its competitors like SpiceJet and IndiGo charge for the sector. GoAir operates maximum flights on Delhi-Mumbai sector, the country’s busiest route. “The airline has almost halved its operation and is in poor financial health. The promoter has no option, but to look for a buyer to revive the loss-making airline,” an industry source said.
04/07/08 Nirbhay Kumar/Economic Times

To Read the News in full at Source, Click the Headline

Categories: GoAir Jul 2008