Friday, November 25, 2011

GoAir slips into red, eyes smaller cities for growth

Wadia group-promoted budget carrier GoAir, which has slipped into the red in the second quarter due to high fuel costs and a falling rupee, is looking at a number of options to return to profitablity in the third quarter. The airline plans to go ahead with a new strategy, under which it will not sell tickets below cost price, induct 3 new Airbus A320s and start new operations in tier 2 and tier 3 cities.

“We had some weak result in the second quarter but we feel confident that we might get a good result in the third quarter,” Georgio De Roni, CEO, GoAir, told Hindustan Times on Monday. “Fuel price has gone up by more than 40% but fares have not.”

“We must deliver profitability so we need to revive some approach,” he added.

The company is also mulling whether to increase fares. De Roni indicated that the airline could increase fares by about 20% in the third quarter, as it was “impossible to sell tickets below the cost of production.”

The company that had placed an order of 20 A320s would be taking delivery of 3 of those in 2012. “We had placed an order for 20 A 320s in 2007 of which we will get delivery of three of the planes in 2012, three in 2014 and four in 2015,” he said.

The airline also plans to deploy new planes in newer destinations, especially in tier 2 and tier 3 cities.