INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

CHANDRASHEKHAR BOARDS GOAIR

AFTER telecom, Rajeev ‘BPL' Chandrashekhar has moved to another passion — aviation. Always a keen flier with his own private jet, Chandrashekhar has now joined the board of the Wadia group-promoted low-cost carrier Go Airways.

Interestingly, Chandrasekhar's involvement in GoAir comes at time when there is speculation in the industry that he is actively looking at entering the logistics and transportation businesses. The erstwhile telecom tycoon hogged the headlines last year when he sold off his 67% stake in BPL Mobile to Hutchison Essar for Rs 1,200 crore. Mr Chandrasekhar also made an entry into the world of politics, getting electing to the Rajya Sabha from Karnataka.

The Jeh Wadia-managed airline is currently on an expansion mode with plans for rapid fleet expansion. The company is in talks with several private equity players and financial institutions for raising equity and debt. “We have received proposals from various private equity players and currently evaluating them,” Jeh Wadia, managing director, GoAir. He did not give a timeframe by when the Wadia family controlled airline plans to dilute some stake to bring in private equity players.

The low-cost carrier needs capital infusion since most of the aviation industry is bleeding due to increasing competition. The share prices of airline companies have tanked steeply and the Air Deccan IPO ran into major turbulence. GoAir is among the airlines which are not making profits and it has to rustle up critical mass in terms of fleet size and network before it can wipe off losses.

Earlier this year, GoAir placed an order worth $1.2 billion with Airbus Industrie to buy 20 Airbus 320 aircraft as part of the airline's fleet expansion programme.

The additional aircraft are likely to be used to connect markets in North India , especially in the metro-to-metro routes. Launched in November last year, GoAir has a fleet of three A-320 aircraft and operates 28 flights covering 14 cities. It plans to add five more aircraft by the year end, get 10 next year and another 15 in 2008, taking the total fleet strength to 33 in three years.

Since its launch, GoAir has seen Jeh Wadia — the face of the airline — increasingly hand over daily operations to professionals. Several senior executives from the Wadia group's other companies — Britannia and Bombay Dying — were moved to key positions in the airline business. Earlier, commenting on if he was taking a backseat in the operations of the airline, Jeh Wadia told that in the start-up phase it was important for the promoters to be more pro-active while once the carrier has taken off, it was for professionals to run the show.

In spite of the dent in their bottomlines, lowcost carriers have steadily improved their market share over the past six months, now accounting for over 25% of the domestic market.