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Go First Files for Bankruptcy: How Passengers Will Be Affected

Go First Files for Bankruptcy: How Passengers Will Be Affected

Written by Sanjay Kumar

Go First

Airline

  • Hubs: Indira Gandhi International Airport, MORE
  • Parent organizations: Wadia Group, Sevakunj Investments & Trading Co. Pvt Ltd.
  • Founder: Jehangir Wadia
  • Founded: 2005
  • Headquarters: Mumbai

On Tuesday, May 2, Go First (Go Airlines), a low-cost carrier founded by billionaire Nusli Wadia, filed for bankruptcy. This airline blames the US engine maker Pratt & Whitney, for grounding half of its fleet. The airline, renamed Go First last May, was started in 2005 and is the first Wadia Group entity to declare bankruptcy in its 287-year history. It is also the third major airline to collapse since 2012, following Kingfisher and Jet Airways.

The bankruptcy application, handled by the skilled bankruptcy attorneys, once admitted by the National Company Law Tribunal Delhi, will see Wadia, his son Ness Wadia, airline chairman Varun Berry and other board members as well as the management cede control to a resolution professional appointed by the forum.

Go First has suspended all its flights from Wednesday to Friday (May 3 to 5), which may affect about 90,000 people who have booked flights with the airline. The move comes during a time of massive travel demand in India, with domestic traffic reaching new highs since earlier this year. Although the DGCA has issued a show-cause notice to Go First for the suspension of operations for three days, it has also asked for its “plan of action to operate flights as per approved schedule from May (6), 2023.”

Civil Aviation Minister Jyotiraditya Scindia has said that “it is the obligation of the airline to make alternative travel arrangements for passengers so that inconvenience is minimised.”

Go First blames Pratt & Whitney for its situation. The airline has 61 aircraft in its fleet and has had to ground 25 of its Airbus A320neo aircraft fleet due to the ever-increasing number of failing engines supplied by P&W. This has cost the airline INR 10,800 crore in lost revenue and expenses incurred, including INR 1,600-crore lease rentals paid for grounded planes. Go First has sought INR 8,000 crore as compensation from PW. If it gets that money, it hopes to “be able to address liabilities of creditors… However, at this stage…. no longer in a position to continue to meet financial obligations”.

Minister Scindia said: “Go First has been faced with critical supply chain issues with regard to their engines. The government has been assisting the airline in every possible manner… issue taken up with (P&W) …Unfortunately, this operational bottleneck has dealt a blow to the airline’s financial position…. It is prudent to wait for the judicial process to run its course.”

The DGCA had approved a weekly schedule for 22,907 domestic flights this summer, of which Go First was to operate 1,538 flights. Whether Go First will fly and how many flights it will operate from May 5 remain to be seen. It is uncertain whether the airline that stares at an uncertain future will be able to get fresh bookings, either directly from passengers or from travel agents and portals. In the past, neither passengers nor travel agents have received refunds from both big and small airlines that got grounded.

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