GoAir takes the big leap, finally

Mumbai: The smallest of India’s low-fare carriers is in a hurry to make up for lost time. Giorgio De Roni, GoAir’s new chief executive officer, is no stranger to aggressive growth. In his previous job with Air One, an Italian private airline, he increased its market share from 6 per cent to 30 per cent. And the fleet count went up from 10 to 64. In the process, Air One became a profitable airline.
De Roni will have ample opportunity to put that skill to good use in GoAir, which has shown a reversal of fortune from two years ago. His appointment coincided with the airline’s announcement last week that it would buy 72 Airbus A320neo planes for $7.2 billion – something that prompted the CEO to say that his “target is to outperform competition”.
That may be a tall order as GoAir remains the smallest of India’s low-fare carriers (market share 6.4 per cent) with others such as Indigo and SpiceJet taking a giant leap in market share as well as fleet expansion. But the aircraft acquisition deal shows that the Wadia group airline is finally taking steps to get into the big league. The six-year-old airline currently has 10 A320 planes, but together with an order of 20 A320s placed in 2006, its total order with Airbus is now 92 aircraft.
Managing Director Jeh Wadia is quick to dispel any sense of disbelief. “Let me tell you, these planes are confirmed orders, not options,” he said, speaking at a press conference last week to announce the deal. The 72 planes will be delivered from 2015 onwards. The company is tightlipped on how it would fund the expansion, except saying that the airline is generating money and that the group is capable of funding the 72-plane deal through a mix of equity and debt.
But what would be the new CEO’s strategy going forward? De Roni says GoAir plans to tap the corporate sector, specially small and medium enterprises, to increase its passenger volumes.
22/06/11 Aneesh Phadnis/Business Standard

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Categories: GoAir Jun 2011