GoAir is falling back on strategies that were discontinued because those were ahead of times.

The airline is contemplating tossing back its red-eye flights once again, and it is in dialogue with several state governments to allow it to develop non-capital city routes with lower sales tax on the air turbine fuel (4% as opposed to 27%) and also has sought a waiver for 20 aircraft norm before an airline goes international from the government, said Jeh Wadia, managing director, GoAir.

GoAir, with a market share of 7.5% (government March passenger data), lost the tag of the smallest commercial airline to Vijay Mallya-promoted Kingfisher Airlines in March this year. It is evaluating adding a different aircraft type for smaller cities, beside its fleet of Airbus A320 narrow body type as per a report in ET by Manisha Singhal.

The push to tap potential from smaller cities, according to Wadia, comes after observing fast-moving consumer goods companies that have beaten the downturn by scaling up in the rural markets.

"We are looking at alternative ways to attract a better and untapped market place for low-cost airlines with smaller aircraft and smaller markets that attract lesser sales tax on ATF. We are looking at evaluating an alternative aircraft type primarily from a perspective of the rural market. In FMCG terms, when the urban markets are drying up, every company starts talking rural. So, Tier-II and Tier-III cities offer opportunity to do point-to-point flights, not the hub and spoke, which the current ATRs with Jet and Kingfisher are doing," Wadia told ET.

The evaluation, according to him, will be completed in a couple of months. Rival carrier SpiceJet also has the Bombardier Q400s for the smaller regional markets in its fleet.

GoAir will also be building up on this strategy of permeating smaller cities by seeking permissions from state governments to fly to non-capital cities in states so that these states develop as feasible stations and the airline can also take the benefit of lower sales tax on ATF which in smaller cities can be as low as 4%.

The idea developed after GoAir successfully started flights to the small town of Nanded in Maharashtra. "What we are planning is refinement to the Nanded model where we are incentivised as the state government has offered us 4% sales tax on flying back from Nanded to Mumbai. What we are requesting is that the government calculate the miles and offer us that tax relaxation from Mumbai to Nanded as well. We have made representations to the other state governments to work on the same plan. This allows these governments to milk their golden gooseand also incentives the airlines," Wadia said.

GoAir, which completed five years of domestic operations, has also sought permission from the government to fly to international routes and waive off the restriction of an airline to have minimum of 20 aircraft in its fleet before it can go overseas.

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