Santosh Nair and Shaheen Mansuri
moneycontrol.com
Giorgio De Roni, chief executive officer of Wadias-promoted low cost carrier Go Air, began his career in the aviation business in 1983 as a check-in agent at an airport. Since then he has worked in various roles across sales, strategy, fleet development, revenue management in different carriers, before taking over the reins at Go Air in May last year. In a free-wheeling chat with moneycontrol.com, De Roni spoke about the targets for his company and
on the issues affecting the sector in general.Go Air aims to fly five million passengers this financial year, nearly 40% more than what it did in FY12. Growth in domestic passenger traffic has been anemic in the last few months, averaging less than 10%. But De Roni is confident is that his airlines strategy of providing value for money to fliers, better service, punctuality and a focus on business travellers in the small and medium enterprise segment, should help achieve the target. Also, profitability, rather than market share will be the focus of the carrier, which has 13 aircraft currently, and will add three more this financial year.
"Till February, Go Air was the smallest player. That changed in March, and we are no longer the smallest. But I am not interested in market share (7.5% in March). I want to deliver sustainable profits to our shareholders. Only if we are profitable can we grow," De Roni said.
He was non-committal on when the airline would turn profitable.
"I am confident of delivering good numbers for this financial year, based on the results we achieved in the last quarter of FY12. Load factor has been consistently increasing (83% in February, 81% in March). We now have a critical mass, a good product that appeals to business travelers. We hope to benefit from a better mix of business fliers, which will help us earn a higher fare," De Roni said.
Go Air is not in a hurry to add more routes, but would instead concentrate on strengthening its presence on
existing routes like Jammu & Kashmir and the North East.
But there challenges aplenty for the sector in general. Rising aviation turbine fuel price, a weak rupee (which makes imports of jet fuel costlier) and cut throat pricing strategies have severely hurt profitability. Of late, there has been some relief on airfare pricing though.
"In the last few months, there has been some sanity in the pricing environment. Carriers are no longer looking market share and are now focusing on sustainable growth in the medium to long term," he said.
Airfares have been steady inching up over the past few months as the cash-strapped
Kingfisher Airlines has reduced its flights drastically.
But De Roni chooses to sidestep this point, saying he does not want to comment on competitors and their strategy.
_PAGEBREAK_
Adding to the growing list of problems for the industry, De Roni feels is the decision by some airports to increase charges steeply for both passengers as well as airlines, towards recovering the cost on modernization.
"Some airports are increasing charges by I would not say significantly, but in an out-of-logic approach. So airlines will start suffering again. What is extremely surprising is that Delhi airport charges the development fee on arriving passengers as well. Having seen the aviation industry across the world over the last 29 years, I feel this is an innovation...a rather peculiar innovation, charging for arriving passengers," he says.
According to De Roni, airports in India looking to increase revenues by hiking fees could be in for a nasty surprise, as passenger traffic may actually decline.
That is because higher airport charges will add to the operational expenses of airlines and they in turn will pass it on to the passengers.
"So the eventual increase in airfare will be somewhere in double digits (because of high airport development charges)," he said.
On the issue of airlines being allowed to import jet fuel directly De Roni said the decision made for good news copies rather than solving the problems of the industry.
To save on the 27% sales tax levied by state governments, aviation companies sought government permission to import jet fuel directly. And while the permissions have been obtained, carriers are facing logistic issues because of lack of storage facility.
"From the time the shipment of fuel arrives at the port, there are logistic issues in getting the fuel from the port inside the aircraft. Unfortunately, at this point, the permission is more an opportunity for media coverage than to solve the problems of the industry," De Roni says.
Indian carriers are working together to resolve the problem, and if they manage to do that, their fuel bills could be 10-15% lower. No mean savings, considering that fuel costs account for 50% or more of any airline’s expenses.
Roni feels one of the main issues facing the sector that in India, aviation is considered as a luxury, unlike most other countries where it is seen as a pillar of development.
"In Italy where I come from, last year the passenger traffic was 60 million. For India too, the figure was the same. But Italy has a population of 59 million and India, 1200 million. Similarly, Ryan Air alone has 180 aircraft, while all the carriers in India put together have 300 aircraft. The potential for growth in India is immense, but there needs to be in place a strong framework in terms of airport infrastructure, legal, and a consistent policy on ATF," he says.
santosh.nair@network18online.comshaheen.mansuri@network18online.com 
