GoAir, the wholly-owned subsidiary of The Wadia Group, seems to have hit an air pocket with a status-quoist market share of 8-8.5% since 2013, perhaps signalling the non-renewal of contract of its CEO Wolfgang Prock-Schauer, which expires in June next year.
Besides, revenue and profitability have also taken a beating. If the FY15 revenue of the low-cost carrier totted up to Rs 2,973 crore, it dipped to Rs 2,791.3 crore in FY16, as did profitability, from Rs 277.3 crore to Rs 150.2 crore — a whopping 45.8% drop. Though the airline has still not filed its FY17 numbers with the Registrar of Companies, estimates are that profits during the year would come down to around `100 crore.
It seems the 12-year journey of GoAir has been slow compared with other airlines established at the same time, such as IndiGo and SpiceJet, which have larger market share, fleet size and destination served. Top-seeded IndiGo, for instance, has garnered 40.8% of the market, while SpiceJet sits at fourth spot with 12.9%. GoAir is at the fifth spot.
According to an analyst, the expansion of the airline would depend on stability at the top management team. Prock-Schaeur, a Jet Airways veteran, signed up with GoAir in 2015 and is the fourth chief executive in the low-cost carrier’s little-over-a-decade-long existence. Until the airline finds a new CEO, chairman and managing director, Jehangir Wadia is likely to lead from the front.
The litany of woes don’t end there. GoAir recently ordered 144 A320 Neo planes, of which it has received five. Such planes are expected to offer 15-20% savings on jet fuel, which makes up the largest chunk of spending by airlines. However, the Pratt & Whitney engines that both GoAir and IndiGo use for their Neos, are facing unending snags as are several other airlines globally using the same combination.
Currently, GoAir operates a 24-aircraft fleet “and plans one A320 Neo induction every month,” claims Kapil Kaul, CEO and director, CAPA South Asia.
In its quest to shore up its fleet size, the airline is reportedly hitting the market with an initial public offering (IPO) over the next few months.
GoAir faces stiff competition from low-cost carriers like SpiceJet and IndiGo, both listed entities. With about 141 planes in its fleet, IndiGo’s parent Interglobe Aviation is valued at Rs 45,792 crore (as on September 5). Meanwhile, SpiceJet, with a 55-plane fleet, is valued at `7,649 crore.
Ambitions notwithstanding, GoAir will remain much smaller than IndiGo, which is adding over 24 planes a year to its fleet — a Go every year. GoAir declined to comment.