GoAir flight to Europe? Airline mulls wide-body aircraft, long-haul routes

CEO Cornelis Vrieswijk said the airline will make an announcement on its first foreign flights in a few weeks but did not disclose the destinations

GoAir is hiring across functions, upgrading its information technology systems, and mulling a wide-body aircraft order as part of its growth plans.   

GoAir has seen modest growth since its inception over a decade ago. Further, in recent months, its operations have been impacted due to issues with the Airbus A320neo engines. On the human resource side, too, there have been churns at the top. 

However, the Wadia group-owned airline is building a new management team and putting in place strategies for efficient operations.

Leading the change is Cornelis Vrieswijk, the airline's new chief executive officer. Vrieswijk, who has worked at easyJet and Transavia, has his task cut out -- streamline operations, which have been impacted due to engine issues, and prepare the airline for growth.  

A long-haul network is one plan that is under consideration. 

GoAir operates a fleet of 35 Airbus A320 aircraft, which have a range of around 6-6.5 hours. This allows for connections to East Asia, South East Asia, and the Gulf regions but the aircraft is not ideal for longer-duration flights to Europe. Further, GoAir has 144 Airbus A320Neo aircraft on order. 

  

"We will look at wide-body opportunities very soon," Vrieswijk said on Monday, in his first media interaction. He added that the airline will make an assessment of long-haul routes and the potential network. However, he said that the airline is yet to begin discussions with Airbus or Boeing for an order. 

GoAir has been planning to launch flights to Phuket and Maldives but its overseas foray has faced delays. Vrieswijk said the airline will make an announcement on its first foreign flights in a few weeks but did not disclose the destinations.  

Continuing challenges with Pratt & Whitney engines have also led to the deferment of its initial public offer (IPO). The airline was looking to raise around $150 million through an IPO but that plan is now on hold. "The IPO is not on the table now," he said.

Two of its aircraft are grounded because of engine issues resulting in tweaks in schedules. Network planning, too, is impacted as deliveries of aircraft and engines have been erratic. "It is a difficult situation," Vrieswijk said.

Vrieswijk aims to bring his learnings from easyJet (where he served as COO) to improve customer focus at GoAir and optimise its costs. This will be crucial as fuel costs have spiked and the rupee has weakened against the dollar.

"One of my prime priorities is to prepare the organisation to cope with the growth," he said. On the cards are upgrades in the IT systems for better network planning and revenue management. The airline is also hiring fresh talent across functions to drive growth and control costs. 

"We have to be smart in managing costs," he said, adding that this includes looking at various operational aspects like managing crew scheduling and monitoring fuel burn, among other things. 

On the positive side, India Ratings has upgraded its ratings for GoAir's long-term debt to A- from BBB as the airline opts for an asset-light sale-and-leaseback model. Security required by lessors for maintenance will be via standby letters of credit instead of cash deposits, it said. 

During the financial year 2017, gains from sale-and-leaseback of aircraft helped GoAir post a 36 per cent year-on-year increase in net profit -- which stood at Rs 2.05 billion as against Rs 1.50 billion in the previous year.