Reviving Go First won’t be easy. Here’s why
Mint explains the flight path of recovery and the challenges associated with it. Running an airline is a risky business. Virgin Atlantic founder Richard Branson has famously said: “If you want to be a millionaire, start with a billion dollars and launch a new airline." Revival of airlines is challenging as a profitable carrier is an output of several things, such as the right fuel price band, perfect aircraft type, solid maintenance contracts, great network, good slots at airports, skilled workforce etc.
In fact, the only revival story over the last three decades is that of SpiceJet, which got a second lease of life in December 2014 in the form the support from the government and a new management. Primarily, the course correction for a failing airline in a market like India requires a hawk-eye over costs, fund infusion and a proactive management. In addition, support from vendors, aircraft and engine lessors, as well as maintenance companies for restructuring of dues repayment plans will be necessary.
To regain customer trust, an airline may also need to be rebranded; on-time performance at competitive fares will also help. While Indian aviation is a deregulated market run on the forces of demand and supply, a soft push from the government for revival can go a long way in changing fortunes. Jet fuel costs make up nearly 40% of Indian airlines’ expenses, compared to a global average of 20-25%.
The civil aviation ministry has been working to reduce value added tax on jet fuel and so far, 19 states and union territories have rationalized it. Airlines are also seeking inclusion of aviation turbine fuel under the goods and services tax to reduce the cost burden. They’re rare.
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