India’s Go First cancels flights after bankruptcy

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Indian budget airline Go First has cancelled all of its flights for the next three days after filing for bankruptcy protection.

The carrier says “a full refund will be issued” to affected customers.

It is the first major airline in the country to file for bankruptcy since Jet Airways went bust in 2019.

Go First blamed US engine maker Pratt & Whitney for previously having to ground many of its planes, which it says caused a severe cash flow problem.

The company “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” Go First said in a statement.

Go First said that the problem forced it to ground 25 aircraft – about half of its fleet of Airbus A320neo planes – which caused about 108bn rupees (£1bn; $1.3bn) in lost revenue and expenses.

The airline also accused Pratt & Whitney of not following an order by an emergency arbitrator, which included supplying “at least 10 serviceable spare leased engines by 27 April 2023”.

In response, Pratt & Whitney said it was “complying with the March 2023 arbitration ruling” and it cannot comment further as “this is now a matter of litigation”.

India’s Civil Aviation Minister Jyotiraditya Scindia said: “The government of India has been assisting the airline in every possible manner.”

The National Company Law Tribunal has agreed to hear Go First’s bankruptcy plea on 4 May.

Go First filing for bankruptcy is expected to give a boost to rival airlines such as Indigo, Air India, SpiceJet and new entrants like Akasa Air to grab a larger share of the market.

Aviation stocks listed on the country’s stock exchanges rallied on Tuesday.

However, engine and aircraft supply chain issues are affecting other airlines in the country, say industry experts.

According to data from aviation analytics firm Cirium, 102 commercial aircraft are grounded in India. They include 60 planes of Go First and rival Indigo that are grounded due to a lack of spare parts.

The collapse of Go First, which is owned by Indian conglomerate Wadia Group, underscores the fierce competition in the country’s airline sector.

In November, India’s second and third largest carriers – Air India and Vistara – announced that they planned to merge.

In 2019, Jet Airways, which was at the time one of India’s biggest airlines, was grounded after struggling with more than $1bn (£800m) of debt.

It has so far been unable to restart operations and is facing a lengthy insolvency process.

TAAI President Jyoti Mayal has expressed concern over the sudden cancellation of all flights by GO First Airline on 3rd & 4th May 2023, stating that it has put the aviation industry in shock. Go First has filed an application for voluntary insolvency resolution proceedings before NCLT as per media & ministry reports. Mayal commented on the struggles faced by the industry regarding correct procedures and protocols, stating it is surprising that a country considered a power centre faces such challenges, again and again, pertaining to the aviation sector.

The cancellations and refunds of tickets to its members and consumers have raised concerns at TAAI, who fear that travel agents will be adversely affected, presenting a significant financial blow as they struggle to revive post-covid19.

TAAI has been advocating to the Government of India, the Ministry of Aviation, the Ministry of Tourism, and the Hon. PM himself to ensure the security of the travel industry/consumers and address airline defaults. The association has been advocating for protection through insurance on tickets or placing monies in an escrow account with the government as protection for the entire ecosystem, most importantly the service provider.

As the President of the largest and oldest premier body, Mayal expressed concern that the government is refusing to hear them and implement better policies. The government, along with the Ministry of Aviation and Tourism, needs to bring policies to safeguard consumers and service provider’s money. TAAI has been promised by the Ministry of Aviation to establish a National Task Force with airlines & DGCA, but weak policies and governance will impact the opening of multiple airports and make the aviation industry fragile.

Mayal stressed that travel and tourism service providers are a vital part of the growth of this country and the responsibility of the government. The vision of a Trillion-dollar economy cannot be achieved with such setbacks. Mayal requested once again that the Hon. The PM looks into their woes and finds a solution with their support to make them a part of the growth and save them from being crippled.