Jeh Wadia to step down as MD

MUMBAI: Change is in the (Go)Air. Ask Jeh. "Systems and processes drive businesses, not personalities," says Jeh Wadia, MD of GoAir. To drive home the point, Wadia has decided to take a back seat from September and leave it to a professional CEO to pilot the airline.
This decision comes at a time when his airline has been in the news for being a takeover target.For the umpteenth time, Wadia says, "We are not in a hurry to sell. Yes, we have received certain proposals and we are evaluating these. We will be open to a stake sale up to 26% if any of these meets our valuation criteria." "And yes, the Chennai-based Paramount Airways is not among the suitors," he adds.
GoAir's expansion plans are fully funded by the Wadia group. The reason for looking at investors is purely based on a long-term strategy. "Like any typical business, we will first look at a private equity investment, then take the company public, after which comes a strategic stake sale, may be to foreign airline," Wadia says.
But that does not take away the fact that GoAir needs funds. Like the other players, GoAir too has been hit by rising fuel costs and cut-throat prices. Wadia defends his model and says the situation went out of hands because of one player who did not follow the conventional low--cost airline model.
"Across the world, low-cost airlines function on the logic that the earlier you book your seat, the cheaper the fare. As you book closer to the date of the journey, the fare rises. And then suddenly, there were tickets with very low fare available very close to the date of travel. That made it difficult for other players who had to compete on these terms," he adds.
While Wadia declines to take any names, it is common knowledge that Air Deccan led the industry into a bloodbath of low prices and free flights a move which affected it the most. Now with Vijay Mallya's Kingfisher Airways buying into Air Deccan, prices are on their journey upwards.
"Although it looks like the situation will change for the better, there is still time before the impact of the recent changes in the industry are felt," he says. In a bid to break even, GoAir requires about Rs 200 more per seat. If things go according to plan, the airline might break even by the end of this financial year, Wadia adds.
Yet, Wadia prefers the conservative approach, even as competitors are busy shopping for aircraft and charting new routes. He revised his delivery of 33 aircraft down to 18 by 2009. "External costs due to infrastructure, policies and taxes comprise over 60% of total costs and growth is not paying. Unless these conditions change, more aircraft and larger operations will only bring additional liabilities." The airline has seven aircraft flying to 13 cities.