Another one bites the dust. In a tweet on Monday evening, news agency PTI reported that the Wadia Group-backed Go First has filed “voluntary insolvency proceedings” before the National Company Law Tribunal, quoting the airline’s CEO, Kaushik Khona.
The development comes just when the country was celebrating its highest-ever single-day domestic passenger traffic and a never-before-seen April. Earlier, media reports had suggested that Go First had stopped the sale of all flights for May 3 and May 4. This came amid the airline facing significant challenges in fleet availability as it battles the non-availability of spare engines from Pratt & Whitney.
Things are becoming clearer with the airline releasing a formal statement on its request for voluntary admission into the NCLT’s insolvency process, which squarely blamed Pratt & Whitney for its woes. All of Go First’s A320neo aircraft are powered by Pratt & Whitney engines unlike IndiGo, which had placed an order with CFM after its initial order with Pratt & Whitney.
Who will be impacted?
The airline carried 8.95 lakh passengers in March (airlines data for April is awaited). Between 55,000-60,000, passengers will be impacted by this decision over the two days. Go First has been operating around 200 daily departures in domestic skies and has approval for around 220 daily flights this summer.
The airline had the worst On-Time Performance (OTP) in March, at 49.2 percent at four metro airports, shows data released by the Directorate General of Civil Aviation (DGCA).
The closure of flights for two days comes a day after the Mumbai airport was closed for six hours owing to pre-monsoon maintenance, which has already cut capacity from Mumbai and will see a spillover of traffic tomorrow (May 3). If the grounding goes beyond two days, Indian aviation will see a major impact.
What should passengers do?
If you are booked on Go First flights for May 3 or 4, ensure that your contact details are updated with the airline so that it can reach out. There is also a possibility that this might be delayed, assuming the airline tries to get in touch with you. Having an alternative plan could be expensive since air traffic has picked up and last-minute airfares are sky high.
The DGCA’s charter for a cancelled flight requires the airline to make a full refund. That may not be enough to book a last-minute flight with any airline. The cheapest flight from Mumbai to Delhi, the busiest route in the country, for May 3 is selling at over Rs 10,000 while the cheapest flight between Delhi to Mumbai was selling at a little over Rs 5,000.
In other sectors where Go First has a presence, such as Mumbai to Lucknow, the cheapest fare is in excess of Rs 18,000 for May 3.
Tail Note
Go FIRST’s financial and operational woes will see it struggle for a while. Passengers will think twice before booking trips with the airline and it may have to lower fares. That would mean it does not make as much revenue as the competition in the best of periods for Indian aviation.
The airline has not been able to deploy as much capacity as it may have desired, leading to a case where its liabilities are far higher than its revenue. But nothing does as much damage as not operating. History shows that very few airlines have been able to recover from such a situation. When Kingfisher Airlines was shrinking, promoter Vijay Mallya famously called it a “holding pattern”. SpiceJet, in 2014, was grounded for a day, before changing ownership. The NCLT filings have made it clear Go FIRST is facing severe turbulence.
It is peak travel season and the regulator and civil aviation ministry may very well step in to control the situation. Until that happens, passengers should wait and watch.
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