Fuel cost is majorly affecting the airline’s profit, and to cope with that, GoAir is set to lease out some of its old planes
GoAir is rethinking its growth strategy due to the ever-rising fuel prices and ongoing troubles with new plane engines and the reducing number of pilots, Business Standard reported.
Fuel cost is majorly affecting the airline’s profit, and to cope with that, GoAir is set to lease out some of its old planes.
Sources told BT that an external consultant had been hired by the airline to look after its network planning. Following this, they decided to maximize frequency on the profitable metro to non-metro routes, instead of adding newer destinations.
International flights to Maldives and Phuket were also supposed to start in 2017. GoAir’s senior management was revamped completely — a new chief executive officer, chief operating officer and chief commercial officer.
A senior airline executive said the company will concentrate on their strengths as of now. “Expansion will be there but it will be controlled and will focus on increasing flights at all price points and time.”
“The taxation on jet fuel is the highest in India. Airlines cannot grow their operations in the prime Delhi, Mumbai routes where it can make money and the potential of a good yield is very limited in airports outside the metros,” he added.
GoAir is planning to make extra bucks by leasing out its old A320 Ceo aircraft to earn extra bucks, in the face of the rising oil prices. This is a factor in GoAir’s capacity management plan as it is set to replace its fleet of old A320 planes.
The airline is in talks with airlines in Cambodia and Vietnam to sublease seven of its old planes, according to people aware of the matter.
Another airline executive said, “If there is an opportunity to return some of our older planes, we will do it but this will not be at the expense of growth. We can’t shrink to hit profitability. Sub-leasing of planes will only happen if aircraft deliveries are normalised and engine issues are sorted.”
Currently, GoAir is operating with 32 aircraft; three of its planes are grounded due to engine problems.Senior officials in the company believe that the slow expansion plan will be beneficial to the company in the long run. “If oil touched USD 100 a barrel, the decision to moderate capacity growth will be vindicated,” they said.