Will GoAir be the first one to go off radar?

GoAir the Mumbai based low cost airline has announced a whooping 37.5% reduction in its monthly flights for the upcoming season. Now it will operate only 500 flights instead of 800 per month. This follows on back of string of reductions which saw the airline reduce its operations by nearly half over past couple of months.

The airline which is fully owned by the Wadia brothers, has been finding it difficult to raise capital from open market to expand its fleet. The rising fuel bills has hit the industry hard.

As it tries to cover up losses by curtailing flights and also by raising the fares, the drop in load factors is a worrisome sign. For GoAir, the competition from Jetlite, Deccan and Indigo has hit it hard. The competition meant that it was not able to raise its fares to cover up losses. Whatever little all airlines raised the fare by resulted in drop in number of passengers flying.

For GoAir whose fleet never crossed the double digit mark, the spiraling costs, and lack of revenue means a death toll. The small fleet means it has not been able to achieve any scale of economies and thus it is the hardest hit. Almost all other low cost airlines have backing of operators or promoters with deep pockets. This is not the case with GoAir.

The drastic curtailing of operations, shutting down of many stations, reduction in daily flights, severe job cutting are the desperate measures being taken to stay afloat. The rising oil prices are not helping the cause for Go.

It is now imminent that GoAir will shut shop. Its just matter of time as to how long does Jeh Wadia manages to keep it flying. The shutting down of Go just shows that we havent learned much from the 90s boom and burst of aviation in India. Then we saw the rise of Modiluft, Eastwest and Damania who sank without a trace. The cycle is being repeated. GoAir is now nearly gone. Hopefully there wont be many followers, and the field remains competitive for the benefit of customers.