GoAir’s plan to sub-lease aircraft suffers setback, talks with Bamboo Airways fall through

By: | Published: October 17, 2018 1:44 AM

The airline was in discussion with the Vietnamese carrier, which has delayed its October launch, for sub-leasing nine of its A320ceo aircraft type.

GoAir’s plan to sub-lease aircraft suffers setback, talks with Bamboo Airways fall through

Wadia Group-promoted budget airline GoAir’s plan to largely be an Airbus A320neo fleet airline seems to have suffered a setback as the airline’s discussions with start-up Vietnamese carrier Bamboo Airways to sub-lease its A320ceo aircraft have fallen through, a source close to the development told FE.

The airline was in discussion with the Vietnamese carrier, which has delayed its October launch, for sub-leasing nine of its A320ceo aircraft type. GoAir, with a fleet of 41 aircraft — a mix of both A320neos and A320ceos — had earlier said that it was weighing options of either sub-leasing its A320ceos or returning the lease of 16-17 of the A320ceos in its fleet.

“We are looking at whether we should be keeping the A320ceos on board or return the leases as they are 20% more expensive than the A320neos. We are looking at the sub-leasing options for the A320ceo fleet as well,” GoAir CEO Cornelis Vrieswijk had told the media earlier in August. The airline plans adding 13 A320neo aircraft to its fleet by March 2019. A deal with Bamboo Airways could not be consummated as GoAir was pricing its A320ceos much higher than the existing market rate, a source said.

“An Airbus A320ceo is available in the market from anywhere between $1,95,000 to $2,15,000 per month per aircraft (depending on vintage). GoAir was asking for around $2,65,000,” said a person familiar with the negotiation.

Responding to a query by FE on the same, a GoAir Spokesperson said, “As a policy, we do not comment on market speculation and internal business developments. We make appropriate announcements at opportune time”. For GoAir, rationalising its current fleet size is important to keep costs under control as the airline is merely adding capacity but not expanding its network. GoAir has announced just one domestic destination, Hyderabad, which was in 2017. It announced flights to Male and Phuket in August, which are just two international destinations it will fly to despite being a 20-aircraft airline for over two years now, a coveted fleet size for airlines in India if they have to launch international operations.

Rival carriers like IndiGo and SpiceJet have both added aircraft as well as expanding network. IndiGo in the last couple of months announced 11 destinations on its network, both domestic and overseas, whereas a start-up airline like AirAsia India already flies to 21 destinations, as opposed to GoAir’s 23 domestic routes with just 19 aircraft. GoAir has been in the Indian aviation space for over a decade.

“GoAir does not have a clear-cut plan for expanding its network. It clearly has more capacity than it has destinations to fly, and no economies of scale. The airline also has slot constraints in Mumbai and Delhi,” said an executive who earlier worked for GoAir.

GoAir does 220 daily flights. An A320 aircraft on a rough estimate would do about six to eight flights a day; with 41 aircraft GoAir can do over 300 daily flights, net of grounding due to engine issues (A320s). “The airline is losing money on the surplus fleet,” he added. In October, GoAir appointed aviation consultancy firm Sabre Airlines Solutions for its network planning, but apparently there is not much movement ahead on the network expansion plan of the airline. Before this, two other firms were hired to write a network plan but their proposals were not accepted by the promoters.

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