The Wadias will stay invested in Go Air despite the sharp rise in oil prices impacting its profitability, said Edgardo Badiali, CEO, Go Air.
Badiali’s claim comes amidst speculations about the airline’s future. Go Air recently withdrew from four sectors, pruned manpower by 30 per cent and decided not to renew the lease agreements of four aircraft.
“The promoters are fully committed to the airline and there is enough financial backing from the group to grow the airline business,” the Go Air CEO said.
“Due to the oil crisis, we are taking drastic measures to cut costs from all sides and restructuring the operations to be leaner as controlling oil prices is out of question,” Badiali said.
As various factors led to increased losses, the airline pulled out from sectors like Kochi, Chennai, Bangalore and Jaipur over the past few months and also reduced its manpower from 1,200 to 800.
Now, the airline operates 26 flights a day against 40 flights earlier. The sectors where Go Air currently operates include, Delhi, Mumbai, Ahmedabad, Goa and Jammu & Kashmir.
Once the situation improves, the airline might re-open the closed routes or even improve frequencies on the existing ones.
Go Air has a fleet of six aircraft and out of this, four leased aircraft are in the process of going back to the leasers as they consume more fuel. The other two were procured eight months ago. By March 2009, the airline plans to induct four more aircraft to replace the fleet with fuel-efficient planes.
The airline is also renegotiating deals with vendors, suppliers, maintenance units and ground handling agencies at various airports to get a better bargain. “We are changing for the better. We are moving away from fixed cost agreements to variable costs and will increase our fleet to 20 aircraft,” Badiali said.
The objective is to drastically reduce the overall operational expenses and minimise losses to provide airfares at comparatively cheaper rates. For example, its Mumbai-Delhi one-way airfare is around Rs 4,000 compared to more than Rs 6,000 charged by full service airlines.