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  • To Begin: Please explain the Indian airline disaster.

One airline’s counters stand out like a sore thumb at India’s busy airports.

Go First, a low-cost airline, filed for bankruptcy earlier this week and temporarily halted operations. Even though the airline has promised refunds, its agents are now getting calls from angry clients.

According to news outlets, the lessors of 20 aircraft to Go First have also requested that they be deregistered with India’s aviation regulator.

The events are reminiscent of 2019 when India’s largest airline, Jet Airways, declared bankruptcy. After Jet Airways, Go First is the first major Indian airline to launch within the past four years.

Return of the legendary Maharaja aboard Air India

On Thursday, the National Company Law Tribunal heard the airline’s insolvency petition, in which it asked the court for temporary directives to keep operating and asked the regulator to refrain from taking any further action against it.

Go First claims that the company’s financial problems are not the result of poor management, but rather engine problems. In its bankruptcy filings, the firm claims it has never been late on a debt payment.

Many of its planes were grounded “due to the ever-increasing number of failing engines” supplied by US engine manufacturer Pratt & Whitney, which the airline claims led to a severe cash flow problem.

After Go First grounded its flights, the counters at Delhi Airport’s Go First check-in area were empty.

Half of Go First’s Airbus A320neo fleet had to be grounded, costing the company an estimated 108 billion rupees ($1.3 billion; £1 billion). Cirium, a company that analyses the aviation industry, reports that in May, Go First planned to conduct 6,225 flights, providing more than 1.1 million seats.

The airline claims Pratt & Whitney failed to meet an emergency arbitrator’s demand that “at least 10 serviceable spare leased engines by 27 April 2023” be provided.

In response, Pratt & Whitney stated that it was “complying with the March 2023 arbitration ruling,” and that additional comment was inappropriate because “this is now a matter of litigation.”

Problems with India’s budget airline

A320neos powered by Pratt & Whitney make up the bulk of Go First’s fleet.

Due to a lack of spare parts and a holdup in the delivery of rebuilt engines from the engine manufacturer, the planes have been grounded since 2020. Flight plans were disrupted and cancellations occurred often since nearly half of the fleet was out of service.

Based on scheduled flights, Go First ranked as the fifth largest airline in India. The Wadia Group, the airline’s owners, have denied any intention of selling out, according to the company’s management. Go First CEO Kaushik Khona told Reuters that the airline would not be sold as part of the insolvency process but rather revived.

By the year 2030, an estimated 350 million Indians will have flown on India’s local airlines.

The aviation industry in India has expanded rapidly. But several airlines, including Jet Airways, Kingfisher Airlines, Air Deccan, Paramount Airways, and MDLR airlines, have been grounded or forced to consolidate due to financial distress from increased competition, excessive debt, and rising costs.

Even with the necessary approvals in hand, the lengthy insolvency process Jet Airways is currently facing has prevented it from resuming operations.

Historically, component supply problems have never been the cause of an airline’s demise in India, according to Mark Martin, founder and CEO of aviation consultant firm Martin Consulting.

The Indian airline Go First has declared bankruptcy and cancelled all flights.

According to Go First, the airline was continually profitable and expanding gradually until 2020, when it began experiencing a string of engine issues.

In is bankruptcy case, the corporation blamed the pandemic’s effect on air travel for contributing to the company’s declining financial performance.

Due to arrears in lease payments, some of Go First’s leased aircraft have been repossessed by their respective lessors. As revenues shrank, oil marketing companies sought an immediate payment model to ease the burden of paying for fuel on a daily basis.

The Wadia Group invested 32 billion rupees over three years, and the government even set up an emergency credit line to help businesses deal with the pandemic’s effects, but the airline was still unable to keep its doors open.

The failure of Go First reflects the intense rivalry in the country’s airline industry, which has had one of the world’s best air traffic recoveries since the pandemic.

More than 37.5 million people flew on domestic carriers in the first three months of 2023, a 51.7% increase from the same period the previous year.

CAPA Centre for Aviation predicts that by 2030, domestic air travel in India will have grown to accommodate 350 million passengers.

Competitors like IndiGo, Air India, SpiceJet, and even upstarts like Akasa Air may benefit from the Go Air situation.

Customers, however, will not have a pleasant time. Mr. Martin predicts that during the next three to four months, fares on Go First’s routes would increase dramatically, perhaps by as much as 50-60%.

More than 50 planes are at risk of being grounded if Go First goes out of business. It’s not just one airline that’s struggling. He claims that current airlines cannot meet the demand because they lack the necessary infrastructure.

As a result of the Go First situation, competitors like India’s largest passenger airline IndiGo may benefit.

According to experts, the sector will also have to deal with problems in the engine and aircraft supply chains.

Te largest airline in the country, IndiGo, has also been plagued by the Pratt & Whitney engine problem.

There are currently 60 grounded aeroplanes between IndiGo and Go First due to a scarcity of replacement parts. However, IndiGo is in a better position because it operates more than 250 planes, many of which use alternative propulsion systems.

SpiceJet has been experiencing severe financial difficulties and reporting massive quarterly losses. In addition, it has experienced an abnormally high number of problems over the past year, prompting the aviation regulator to keep a careful eye on the situation.

However, experts agree that the Indian aviation market as a whole will continue to expand, with the help of only a handful of major players.

Air India and Vistara, the country’s second and third largest airlines, respectively, announced their intention to merge in November. When Air India placed an order for 470 planes with European manufacturer Airbus and American manufacturer Boeing in February, it was also a world record.

SOURCE :- https://www.bbc.com/news/world-asia-india-65458136


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