GoAir eyes ultra-low-cost carrier model to strengthen its position

GoAir is keen on a major expansion drive in terms of network and aircraft fleet, and is betting big on its ultra-low-cost carrier model to consolidate its position as one of the few Indian airlines making profits in a highly-competitive and cost-intensive market.

Kaushik Kona, GoAir CEO, in an interview with PTI highlighted that while the sector is facing temporary headwinds, the airline believes that it is uniquely placed with its inherent ultra-low-cost structure that has always stood us in a good stead. In March, founder Jeh Wadia from the promoter family stepped down from the company’s management. The airline also announced the elevation of Ben Baldanza, a global airline professional, as vice-chairman. Baldanza had been accredited with reviewing and taking public Spirit Airlines in the US.

There have also been talks that GoAir has been on course to raise funds to fuel its expansion. Kona said he remains confident that the ULCC (ultra-low-cost carrier) model will set GoAir on a unique growth route. “At GoAir, we are confidently moving ahead, thanks to our ULCC model,” he said.

The CEO pointed out that the ULCC model involves single aircraft and engine type, with common buyer-furnished equipment that provides the lightest and most cost-efficient high-density seating of 186 for its Airbus A320 neo aircraft. “All this helps to keep our operations simple and overall cost structure low, along with a common skill set for pilots and the engineering team, among other training requirements.”

Kona sounded confident about a highly-underpenetrated Indian aviation market, which he said, once the COVID-19 pandemic ends, is expected to witness a huge surge in demand. “We cater to a large proportion of first-time flyers and non-business travellers. We already see strong growth shoots from small cities – opting for shorter travel time vs. railways. At the same time, we expect the trend of intermittent vacationing or short-term leisure holidays growing post the pandemic,” he said.

The second factor driving optimism at GoAir, Kona said has been its good track record of profitability above everything. Owing to its point-to-point network operations to navigate slot constraints, GoAir claims a high aircraft utilization rate of 12.9 hours per day and a pre-COVID profitability record. “We were profitable since inception till 2019 and also closed 2020 as a cash positive player. Efficient operations are our USP and we don’t compromise on this,” Kona said. “GoAir started with the aim of being a profitable player and not just chasing the market share.”

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Kona said that in retrospect, the airline believes that the measured expansion plan has worked in the interest of the company.