Giorgio De Roni, CEO, GoAir, shares his perspective on the Indian aviation industry as well as his airline
I would recommend an in depth analysis and implementation of the best practices worldwide. All stakeholders in India understand the value and contribute consequently to a stronger and more vibrant aviation sector that might really contribute to support the country and the citizens of India through a revised and more efficient regulatory environment. If airlines would not be penalised with heavy taxes and high costs in operations, they could transfer the benefit of a lighter cost structure to the customers through more appealing fares, boosting demand and supporting the economy of the country.
Our network covers both leisure and business destinations. On the latter, our GoBusiness product is definitely witnessing a higher growth and we are now planning value additions to exceed our customers’ expectations. The target of our business class is the price conscious business traveller who appreciates the comfort we offer on board and our price proposition that is normally less than 50 per cent than our competitors’.
We have recently applied for the authorisation to fly internationally and we are confidently awaiting a reply from the Ministry of Civil Aviation. Indian airlines with less than 20 aircraft are presently not allowed to fly international, whereas foreign carriers, less than five years in operation and a very limited number of aircraft, can fly to/from India. Extending our network to international markets will allow us to increase employment here, generate additional inflow of foreign currency through increases in tourism from foreign countries and create new opportunities in trade for Indian enterprises.
At the moment, we do not have a suitable aircraft to operate in many regional airports and we are carefully analysing various opportunities.
GoAir has just received a brand new A320 aircraft at the end of January. This has allowed us to widen our network with new routes between Ahmedabad - Kolkata, Kolkata -Guwahati and Kolkata - Bagdogra and to increase frequencies on Delhi -Ahmedabad. Four additional new aircraft will be added by December 2013 and these deliveries will allow us to further strengthen our presence on some key regional markets with strong demand both on business and leisure traffic.
Airlines in India operate in a very challenging environment characterised by extremely high costs. In addition, airlines suffered additional cost due to excise duties and octroi, making the fiscal burn on fuel higher than 40 per cent. Airport and navigation charges are continuously increasing at rates significantly higher than the inflation rate. The consequence is that airlines, purely to survive, have been obliged to transfer a significant increase in cost year-on-year to the passenger with an increase in fares. It is therefore vital for any airline to make all efforts towards efficiency. For GoAir, this has been translated in significant investment in our fleet, which is the youngest in India, with lower fuel consumption (and therefore lower gas emission and improved impact on pollution), more efficient and cost-effective maintenance processes and very high aircraft utilisation (the highest in India and among the highest in the world for narrow body aircraft), notwithstanding a remarkable performance in terms of punctuality.
The results achieved are a consequence of team effort and significant investment in training and product enhancement. We constantly strive to meet and possibly exceed passengers’ expectations: we have introduced a web based loyalty program, we are constantly improving our business class with rewarding results in corporate traffic and SME traffic, we are among the best airlines in term of on-time performance and the rate of complaints per passenger carried is by far the lowest in the industry. We have deployed many projects targeting cost efficiency, particularly on fuel. In the next 18 months, seven new aircraft will be added and we plan to further increase our presence in some key non-metro markets.
India is expected to become the third largest domestic market worldwide by 2020. However, to sustain growth a significant improvement is required on various aspects, from taxation on fuel to infrastructure efficiency and cost transparency.