The Hindu Business Line : `We're targeting South; Chennai is on our shortlist'

THE Wadia family-promoted GoAir airline, which started services earlier this month, has major plans on the anvil. It will soon induct its second aircraft and spread its wings to sectors in the South and the West, with Chennai blinking brightly on its market radar.

In an interview with Business Line, Mr Jeh Wadia, Managing Director, GoAir, dwelt on his plans for the airline and the course that the Wadia group will now take to meet emerging challenges.

Excerpts:

How has GoAir performed in the first two weeks of operation? What are your load factors and what has the customer response been like?

The customer response has been encouraging. And our load factors too have not been bad. In fact, the performance has exceeded our expectations. However, the exact load factor is confidential.

What are your route expansion plans?

The second aircraft will be in operation by the first week of December. We are targeting some centres in South and may be North. The exact destinations are under consideration and Chennai is on our shortlist. We will announce the destinations in the next couple of days.

Low-cost carriers have developed several innovative strategies to reach the customer. What are the unique distribution channels that your airline has tapped?

We have started selling our tickets at generic points of distribution such as the post office. But we are also looking at expanding our own network. Our tickets can be bought at more than 2,000 Tata Indicom shops and 10,000 Inlott lottery shops. And we are also looking at other distribution points. The aim is to create as many outlets as possible.

What is the current equity base of the airline and would you look at expanding this in the future and how?

At the moment, we are not looking at expanding the capital base. There is no urgent need to bring in more equity partners. We are self-sufficient with the investment that Wadia family has already made.

We have not taken any money from Britannia, Bombay Dyeing, Bombay Burmah, or any of the other group companies.

The Wadia group is in a diversification mode. In the long term, would you consider exiting some businesses and entering others?

The group is basically restructuring itself, and trying to identify which businesses to grow, which we could potentially exit, and which new business we would like to create for ourselves. We would like to concentrate on retail, real estate, financial services and airlines, though there are other businesses in which we would remain.

You have not imposed a fuel surcharge unlike other airlines. This must be at a cost to the company. Would you be imposing it at a future date?

Currently, we are not impacted to such an extent that we have to impose the surcharge immediately. But we may do so in the future. The issue is under consideration.

We plan to stabilise the operations this year, and grow aggressively from October 2006.

Our objective is to commoditise air travel and expand the market. The idea is not to infringe on existing markets that other carriers fly on. As we grow, we will convert rail passengers to air.

At present, our fares are cheaper than those of any other airline and even second a/c and sometimes third a/c rail fare.

Are you likely to enter cargo operations and when?

Yes, it is under consideration. We are seriously looking at cargo and we should conclude an agreement shortly. Initially, the airline would handle cargo, essentially courier packages. Progressively, we would also consider a freighter operation.

Have you faced any problems with hiring staff, especially pilots and engineers?

The shortage of pilots and engineers is a short-term issue that has to be built into your business plan. In the long term, we do not see it persisting. The reason for the sudden shortage of personnel with specialised skills is that aviation, which was growing at 4 per cent just three years ago, suddenly started growing at 26 per cent.

The shortage is therefore not unexpected. However, the aviation sector is developing and people are coming forward to set up training facilities.

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