Mumbai: Wadia Group-controlled Go Airlines India Ltd plans to take delivery of 13 additional Airbus A320neo jetliners by the end of December as it gears up to expand domestic services and launch international flights starting with Thailand. The company, which runs the GoAir brand of budget airline, expects the newest A320neo planes to augment its efforts to cut operating costs, its new chief executive Cornelis Vrieswijk said on Thursday.
The company has meanwhile dropped plans for an initial share sale, although it could be revived in the future, he added.
Vrieswijk, who joined GoAir in June, said the carrier is exploring options to sub-lease some of its 17 Airbus A320ceo airplanes. The step which involves leasing out of GoAir’s already leased planes to a third party is expected to help in further cutting costs as these planes are less fuel-efficient than the A320neos.
GoAir will finance the purchase of the 13 new A320neo planes through the sale and leaseback method, Vrieswijk said. Under sale and leaseback, a leasing company buys a new aircraft from an airline and then leases it back. This allows the carrier to take the plane and associated debt off its balance sheet.
GoAir has a fleet of 36 aircraft, which includes 19 Airbus A320neo and 17 A320ceo planes. The A320neo consumes between 15% and 20% less fuel than its predecessor, the A320ceo. All the planes are currently on operating lease as the carrier follows an asset-light model like most budget airlines.
GoAir is among Indian carriers hit by a sharp rise in fuel prices, a weaker rupee and intense competition, which has deterred efforts to raise fares sufficiently to cover the higher costs. “The only way to survive in the current environment is to be efficient and keeping costs low,” Vrieswijk said.
GoAir, which launched its domestic operations in November 2005, will start international operations from 11 October to Phuket from New Delhi and Mumbai. The airline will subsequently launch flights to Male in Maldives from Mumbai and Delhi on 14 October. It is also looking at code-sharing partnerships with other foreign airlines.
Vrieswijk said GoAir is also exploring long-haul no-frill services and adding wide-body planes in the future.
It, however, doesn’t have any option in its existing orders with Airbus to convert pending deliveries of A320neos to wide body jets, he said.
GoAir had ordered a combined 144 A320neo planes a few years ago.
“Deliveries of the A320neo planes have been delayed and not downsized due to snags on Pratt & Whitney engines,” Vrieswijk said. “Ideally, we would like to have more planes in our fleet, but the delivery delays due to engine snags prevented this.”
Two A320neo planes of GoAir have been grounded due to engine snags.
“We have some spare engines available while some of them will be delivered shortly,” Vrieswijk said adding, “These planes will be air borne soon.”
He said talks are on with P&W and Airbus to resolve the issue.
Meanwhile, GoAir will continue to cut costs although it is comfortable with the current cost levels, Vrieswijk said.
“GoAir has had prudent growth (for some time now), and going ahead, the focus will be on profitability,” he said.