Explainer: What Is Go First Bankruptcy And How Will It Affect Indian Aviation Industry?

When Tata-led Air India signed the Boeing and Airbus deal, everyone lauded the Indian aviation industry as it brightened its spot on the global aviation map. But the recent incident of Go First Bankruptcy has sent shockwaves to the otherwise swelling Indian aviation space.  

As of now, Go First has stopped bookings of all flights. As far as its cancelled flights for May 3, 4 and 5, 2023 go, Go First has said that everyone will get a full refund. The official statement reads, “A full refund will be issued to the original mode of payment shortly. We acknowledge the flight cancellations might have disrupted your travel plans and we are committed to providing all the assistance we can.”

Go First Bankruptcy Crisis – Explained

A severe fund crunch-hit Go First on Tuesday, filed for voluntary insolvency proceedings with the National Company Law Tribunal (NCLT). Just hours after the Go First cancelled all scheduled flights for May 3, 4 and 5, 2023, the Indian airline tip-toed its future in NCLT while also blaming Pratt & Whitney (PW) for not adhering to the arbitration award. 

In the backdrop of all this, Go First had been facing headwinds for many quarters, primarily due to the unavailability of aircrafts. Since its A320neo planes are fueled by Pratt & Whitney, the airline has faced issues due to non-fulfillment of supply order by PW. As per media reports, due to PW’s faulty engines, almost 50 per cent of Go First’s fleet has been grounded. 

However, with Go First cancelling flights for three days, many are wondering about the way forward. 

Go First Crisis – Impact On Aviation Sector And The Way Forward?

The Go First bankruptcy will definitely have an impact on the airline stakeholders, cabin crew, pilots, passengers and many more. However, the Indian aviation space, since it is already battling with a high demand for pilots, may soon see viable workforce to fill these positions, in a rather positive light. However, the management of air traffic, or a possible shortage of flights on domestic routes may be a concern as well. 

In this particular case, since the application has been submitted to NCLT, an interim resolution professional is expected to take over the operations of Go First. While some experts believe that the airline may improve its health towards the end of this year, there is no guarantee of the same. 

Till now Go First has officially not said anything on how it is trying to navigate this crisis. Since the Go First bankruptcy crisis is bound to have an impact on the overall health of the Indian aviation industry, the government is also trying to extend its support in one way or the other.

Shortly after Go First announced voluntary insolvency, Union Civil Aviation Minister Jyotiraditya Scindia said, “Go First has been faced with critical supply chain issues with regard to their engines. The GOI has been assisting the airline in every possible manner. The issue has also been taken up with the stakeholders involved…..Meanwhile, the DGCA has issued a notice to the airline on the sudden suspension of flights. It’s incumbent upon the airline to make alternative travel arrangements for passengers, so that inconvenience is minimal.”

Whether the government will actively work on a resolution at its level or lend external support to Go First via other channels, is for the time to tell. However, one thing is clear that the Indian government is actively monitoring the Go First crisis and is willing to extend its support whenever and wherever necessary. 

Aviation Sector – Current Scenario

On April 30, Civil Aviation Minister Jyotiraditya Scindia announced that domestic air traffic touched an all-time high, surpassing the pre-Covid average. As per the official data, a total of 4,56,082 passengers flew on 2,978 flights. However, there were a total of 5,947 flight movements.

Scindia even tweeted, “Indian civil aviation sector is setting new records everyday - Post-Covid, skyrocketing domestic air passenger numbers are a sign of India's rising growth and prosperity.”