‘It would be a mistake to import a model from abroad'

As the competition heats up in the domestic skies, Mumbai-based low-cost carrier GoAir has decided to bring in Mr Giorgio De Roni to lead the airline into the next phase of growth. In his previous role as the head of Italian airline Air One, Mr Roni increased the airline's market share from 6 per cent to 30 per cent within 10 years and increased its fleet capacity from 10 aircraft to 64 aircraft. Mr Roni takes over at GoAir when the airline aims to increase its market share from 6.6 per cent — which is way behind IndiGo and SpiceJet. GoAir's new Chief Executive Officer took some time out to discuss the airline's strategy for growth and his views on the Indian aviation market.

Excerpts from the interview:

How important do ancillary revenues become for low-cost carriers in an atmosphere of rising fuel costs?

Ancillary revenues have become normal practice, not only for low-cost carriers but also for traditional carriers. Although I do not deny that they contribute to improving results, I see them as an opportunity offered to our guests to flexibly choose what they really wish through unbundled services charged at reasonable prices on top of the formal trip fare.

GoAir's new initiatives, such as in-flight entertainment for rental, form an exciting new channel for revenue. How much more would GoAir like to increase its ancillary revenues by such innovative offerings?

GoAir pays great attention to satisfying, and possibly exceeding, customers' expectations. Technological innovation allows us to offer our guests a wider choice of additional services, to enjoy a relaxed and pleasant experience on board. That's the main reason why we have recently implemented, for instance, the Mintpod service.

Will the European model of low-cost carriers work in India? Will concepts like getting revenues for every piece of check-in baggage, un-numbered seats and priority boarding work in India?

I think that generalising the concept of low-cost carriers might be misleading. We have been witnessing an evolution of the basic concept first elaborated by Southwest Airlines in the US and Ryanair in Europe. At present, some so-called LCCs offer business-class opportunity, Live TV on board, and frequent flyer programmes. Others still focus almost exclusively on low fares and basic services. Personally, I think it would be a mistake to import a model from abroad. We have to meet and exceed customers' expectations, and these may vary from country to country. To continue on our profitable path, we will concentrate our efforts on on-time performance (over 90 per cent in recent months), offering competitive fare and an overall pleasant experience on ground and on board. Therefore, we might not need additional revenue flows, although we will continue to monitor market evolution and competitors' behaviour.

What direction does GoAir need to take to sustain the growth momentum?

The Indian airline industry will continue to grow significantly in the coming years and we are proud to offer our services to a larger market, travelling both for business and for leisure (incidentally, supporting also the development of the tourism industry within India). In the next 24 months, GoAir will double its fleet to be able to satisfy the market and we are analysing many opportunities to sustain our profitable growth. Furthermore, additional new aircraft will contribute to keep our fleet the youngest in India with an average age of less than two years.

Airbus A320s have become the aircraft of choice for many airlines. What made you chose Airbus? Were there any fears that the huge order backlog for Airbus might interrupt your schedule of receiving the aircraft?

We have been operating A320s for years and we are very satisfied in terms of reliability and efficiency. And our guests appreciate the comfort the A320s offer. In the recent past we evaluated different aircraft and our final choice has been the A320neo. Thanks to its technological innovations in engines, the aircraft will significantly reduce pollution and improve fuel consumption considerably, allowing us to transfer the cost benefit to our passengers through even more appealing fares. Similar considerations might have pushed other carriers to choose the same aircraft but we are not at all worried that Airbus might face delays in deliveries. Our first A320neo will definitely fly in 2016.

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