GoAir sees profit for second year in a row

At a time when domestic airlines are struggling to survive, Nusli Wadia’s GoAir has become the second operator to report back-to-back profit.

In 2012-13, the low-cost carrier made over ₹100-crore profit on a revenue of ₹3,000 crore, and saw profit again in 2013-14, CEO Giorgio De Roni told Business Line .

Last year, high cost of fuel and rupee depreciation forced the airline to transfer the additional cost to the passengers, De Roni said. Hence, it had affected demand. “But still, we have been able to deliver a profit.” He, however, did not disclose the numbers as it was yet to be presented to the airline’s board.

Another low-cost airline IndiGo has been reporting back-to-back profits for the last five years.

De Roni also pointed out that with fuel taxes as high as 30 per cent, it is one of the highest in the world.

GoAir’s fuel cost itself represents 50 per cent of the total cost of the airline, but because of the relatively efficient cost structure, it has been able to grow revenue 20 per cent annually.

The carrier expects this fiscal to be more stable than the previous year. It has decided to increase the number of seats on offer 21 per cent to 1.15 million this year. GoAir has also ordered for 73 Neo Airbus aircraft, whose delivery will start in a few months’ time and up to 2020. These new Airbus aircraft will have new generation engines which are 15 per cent more fuel-efficient. The ticket price of each of these aircraft is around $100 million. The 19 aircraft it has are on lease-cum-buyback arrangement with one of the financial entities of the engine-maker Pratt& Whitney.

The airline’s passenger load factor is above 81 per cent, putting it ahead of other operators in the country. The turnaround time for each of the aircraft is about 25-30 minutes in non-metro stations and 35-40 minutes for metros. Each of the aircraft clocks about 13 hours a day. The employee to each aircraft ratio is 120, which De Roni said was not a cause for worry. The airline has about 200 pilots and all of them are Indians.

He said the airline has come out with a Vision 2020 plan which focuses on offering high customer services. “We cannot compete in terms of network and fleet with other airlines. Therefore, we have started a process where we focus on giving maximum customer satisfaction.” The airline will fly international routes, but will only deploy 13 per cent of its total capacity there.

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