GoAir plans to remain profitable through capacity expansion

Airline will strengthen in existing markets before adding new destinations

After stunted growth for some time, GoAir, the airline operated by the Wadia group, plans to expand operations.
 
It will add three A320 neos by the end of August and new frequencies in the ongoing (till end-October) summer schedule. But, no new destinations; it will focus on increasing the capacity in existing markets.
 
“Currently, the places we fly to represent almost 85 per cent of the domestic market. What we want to do is connect these cities with higher frequencies. That’s what our route planning will mirror in the near future,” Wolfgang-Prock-Scahuer, chief executive officer (CEO), told Business Standard.

 

With 24 aircraft, it now flies to 23 airports. The airline is adding a first non-stop daily flight on the Kolkata-Pune, third on Bengaluru-Pune and Delhi-Ahmedabad routes. Plus, a fifth daily non-stop flight on the Delhi-Patna one. Delhi-Leh gets an additional, fourth, non-stop daily flight. And, a seventh non-stop flight on the Delhi-Lucknow sector.
 
Overall, the airline will operate 205 daily flights this summer season, a fifth higher than the previous year.
 
“The Kolkata-Pune flight is a good example. We already had two connecting flights but felt there was enough demand to add a non-stop; we want to become strong in these 23 markets. So, you will see addition of frequencies in these markets and then we will venture into new destinations,” said Prock-Schauer. This planning resembles market leader IndiGo, which has been adding capacity relentlessly on existing routes, increasing its market share. IndiGo flies to 44 destinations with 133 planes; SpiceJet has four destinations with 49 planes.

 
GoAir’s expansion plan faced difficulty as the delivery of aircraft was delayed due to a snag in the engine of the A320 neo. It had placed orders for 144 of the neos in two tranches, of which it has received five. Prock-Schauer said they’d add 14 aircraft this financial year, taking the count to 38 (19 neos). “Due to the engine issue, we are a couple of months behind our delivery schedule for those planes. The second half of the year will lead to normalisation of our original plan. We are quite confident of the measures taken by the manufacturer to rectify the faults. Hopefully, after it becomes normal, we can pick up according to our original plan of expansion,” he said.

 
The engine issue has also forced the airline to delay its international expansion plan, earlier scheduled for the previous winter schedule. “The issue led to a situation that we had to postpone our international expansion to the winter schedule of 20117-18,” the CEO said.
 
GoAir, sources say, will focus on West Asian destinations like its domestic rivals. It is likely to start its international foray with a Kochi-Doha flight, in November.
 
The airline’s plan for an initial public offer (IPO) of equity also got delayed due to the delay in aircraft delivery.