Sept. 03--NEW DELHI -- Go Airlines India Pvt. Ltd's head of commercial operations Suraj Sundaram has quit, the latest in a series of exits by top executives at GoAir, India's smallest airline by market share that faces an intense fare war and rising costs.
Chief executive officer (CEO) Giorgio De Roni, who in a recent interview conceded the top-level exits worried him, confirmed Sundaram had resigned as vice-president, revenue management.
"Yes, he has resigned. Friday was his last working day," De Roni said. "In some areas, we have a higher turnover, but that's part of the evolution of the airline business."
Sundaram, who previously was chief commercial officer at Africa's Arik Air, may be eyeing the vacant chief commercial officer position at SpiceJet Ltd, or "going back to Canada where he came from", said a person familiar with the matter, declining to be identified.
Sundaram could not be immediately reached for comment.
The budget airline, promoted by the Wadia Group, has seen several senior executives leave in the past three years.
Among them are former chief financial officer Sujit Cherian, his successor Joy Basu, former head of revenue Kashyap Mansata, former head of sales Praveen Nair, and Rahul Deans, former head of sales, marketing and revenue management, as well as several top engineers.
GoAir, which started in 2005, flies to 21 cities with 15 Airbus A320s planes and has a 9% share of the domestic market. It hasn't been able to gain a bigger share because it hasn't been able to state its specific offering or uniqueness, said an executive at a foreign airline, also declining to be named.
"What really is GoAir's reason to exist? What is their strategy to profitability? What are their objectives? Nobody knows," this executive said. "So, without a clear offering, it is natural that they are headed towards oblivion. The best anyone can suggest is to sell 49% and recoup investment."
India opened its airline industry to foreign investment last September and GoAir was seen by many industry experts as a potential candidate for a stake sale. But while Tata Sons Ltd has formed an airline joint venture with Malaysia's AirAsia Bhd, and Jet Airways (India) Ltd has agreed to sell a 24% stake to Abu Dhabi's Etihad Airways PJSC in a deal valued at $900 million, GoAir hasn't made headway in finding a foreign investor.
"We didn't start on this project immediately afterwards," De Roni said, defending the airline's slow progress.
"It's true we have appointed a merchant banker (JP Morgan) to support us. It's a shareholder decision and not a management decision. We are not under pressure to take decision," he said. "The strategy we have in mind and shareholders are recommending is to analyse opportunity to strengthen the company. Within few years, we will get 77 more aircraft or probably even more depending on the market. So I think a strategic partnership makes sense, but at the end, it's a shareholder decision."
The airline is still analysing options and has not even shared these with the board, he said. "The shareholders are not interested in selling the company, but they want a partner to support the growth of the company."
The immediate challenge for the airline industry is the escalating costs, the CEO said. Operating costs for Indian airlines have increased by 20-25% led by the rupee's steep depreciation against the US dollar and higher fuel prices.
"We are going through a challenging environment -- weak rupee, high cost of fuel, irrational pricing from some competitors. I do hope the competition will find a more rational approach in the future in order to be sustainable," De Roni said, noting that domestic fares had dropped by about 10% since last year.
On AirAsia group CEO Tony Fernandes saying recently that AirAsia India, when it launches, "will offer the lowest denominator cost by unbundling the fare", in other words, cheaper tickets, De Roni said, "...He claims that he can discount fares significantly. Okay, let's be ready, don't be scared, don't underestimate the threat, but work to deal with it," he said. "No competitors worry me. I must be ready to take competition successfully."
De Roni said the privately held airline made a profit of Rs.100-150 crore in 2012-13, and that despite the difficult business environment he has "budgeted" profits for the current fiscal year, too. But Consulting firm CAPA Centre for Aviation estimated in a May report that GoAir made a $107 million loss in 2012-13.
The Italy-born De Roni, who began as a check-in agent at an airport, was himself speculated to be looking for jobs in Europe when he went on leave in August.
"Not me," he said. "First time in two years I took two weeks' leave to go to Europe. I am totally surprised by these rumours, which are totally unfounded."
De Roni said he has a three-year contract that will end around May next year.
Copyright 2013 - Mint, New Delhi
