GoAir is the leading Indian budget Airline
GoAir has a captivating theme, ‘Fly Smart’.
GoAir has now come up with a masterstroke.
International operations set to begin, IPO to be launched
Rs 10,000 million to be raised easily, may surpass IndiGo
72 + 72 A320neos already ordered !!
India’s budget airline GoAir has finally firmed up its well-laid plans to go International. Simultaneously, it is preparing for listing in the 2016-17.
Earlier report : GoAir can now Fly International; May Launch an IPO
Go Air, a Wadia Group company, has sought permission to fly to Phuket, Bangkok, Sharjah, Kuwait, Kunming and Guangzhou from its two hubs in Delhi and Mumbai by April 2017. By October 2017, the airline intends to connect Kochi, Chennai and Hyderabad with Dammam, Kuwait, Muscat and Sharjah.
GoAir Chief Executive Officer (CEO) Wolfgang Prock-Schauer has already written to the ministry: “We require allocations for proper planning and hence we request approval for designation as an Indian carrier to fly the routes mentioned.”
A ministry official said the airline would be given seats on almost all routes, provided India had bilateral agreements with those countries.
Another low cost carrier in India, SpiceJet, started international operations in 2010, while the other LCC, IndiGo, in 2011. Both have built their international plans around short-haul routes.
Aviation analysts believe that it is prudent for an Indian airline to fly on shorter routes in the Middle East and Asia Pacific because most of the passenger traffic comes from those routes.
GoAir launched its operations in 2005. In 2016, the airline has major expansion plans like its other rivals.
With the induction of the new Airbus A320neo in May 2016, GoAir’s fleet size reached the magical figure of 20 making it eligible to fly international. As of now, GoAir normally operate with a passenger load factor of 83.7%. Passengers carried by all domestic airlines in India during Jan-Apr 2016 were 30,935 million of which GoAir carried 2.54 million. GoAir, thus, has a market share of nearly 8.2%.
This, aviation analysts assume, could be a possible trigger for an early listing. GoAir intended to list by October 2016 to raise around Rs 10,000 million and that made a case for it to speed up its international plans.
Honoured with the Best Airline Award for Efficient & Quality service by PATWA for two consecutive years in a row, GoAir reported a profit of around Rs 1,660 million in 2015-16.
A former CEO of Jet Airways, now an independent analyst, Steve Forte’s views on GoAir are : “If GoAir starts a successful international operation, its value could increase substantially in the event of an initial public offering (IPO), especially if it has a foreign carrier to back it up. It is important to know that the initial strategy of the founder (Wadias) was to create an airline with the ultimate goal of an exit. The IPO could be the beginning of such a strategy. GoAir will be a good investment for a foreign carrier wishing to establish a foothold in India.”
In its preparation for expansion and for the IPO, GoAir had made Prock-Schauer CEO and managing director in April.
Positioned as ‘The Smart People’s Airline’, Go Air has chosen Airbus for its ambitious expansion plans. A320neo being at the core of its plans.
Further, as part of its expansion, GoAir has placed an order for 72 more Airbus A320neo planes worth around $7.5 billion at list prices. Wolfgang Prock-Schauer responded to queries on A320neo aircraft deal with the airbus: “We had ordered 72 in 2011. These will be delivered till 2020. The 72 planes we ordered in July 2016 will be delivered between 2020 and 2025. So, this order takes care of fleet requirements till 2025.”
Today, an Airbus A320 costs $98 million, while an Airbus A320neo costs $107.30 million. Airbus claims that this new type of aircraft burns 10-15 per cent less fuel than the existing versions. As of now, another budget airline IndiGo is the only operator of A320 neo in India. With the induction of A320neo planes, Go Air will like to expand its network further and offer fliers better connectivity and continue its growth as one of India’s preferred low-cost airline.
“The new A320neo provide us the competitive edge to achieve our growth targets and help us strengthening our presence in the wider region. It also reaffirms Go Air’s commitment to deliver the most modern, comfortable and excellent air travel experience to all customers as well as to strengthen the sustained positive growth and business expansion of the company. The new aircraft will help us in unlocking new domestic routes while providing a springboard for continued international network expansion in the years to come.” said Wolfgang Prock-Schauer.
“Unbeatable operating economics of the A320 Family,” said Airbus Chief Operating Officer Customers, John Leahy, “Go Air is among the three first A320neo operators, and with an order for 144 is one of the leading operators of the type.”
Trade analysts have now reasons to look forward to a another blockbuster IPO offering.
In 2015, the IPO of IndiGo, was subscribed 6.14 times, A320neo being the chief factor. When IndiGo did not receive the neos by December 2015, its shares nosedived. It recovered partially later when IndiGo took delivery of Asia’s first A320neo aircraft on 10 March from Airbus.
Whether GoAir IPO could raise the bar set by IndiGo earlier in November 2015, remains to be seen.