Go First Crisis Explained: Here's How The Airline Became 11th Carrier To Fail In A Decade

Before Go First multiple airlines in India failed and even ended up losing their air operator certificate, including Jet Airways, Kingfisher, Indian airlines, and more.

Image for representation

The tottering Indian aviation sector hit fresh turbulence when early this month, another flourishing private airline was suddenly grounded owing to various problems, making it the 11th in a decade to fall from the skies.

Throwing their hands up, the Go First budget airline`s owners -- the Wadia Group -- filed voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT) sending shockwaves through the entire airline industry.

Go First was plagued by a peculiar problem -- the purported failure of the jet engine manufacturer, Pratt & Whitney, USA, to supply engines/spares for its aircraft that grounded nearly 40 percent of the fleet for several months before it was compelled to totally suspend operations from the first week of May 2023.

While the DGCA slapped a show-cause notice on the carrier for its abrupt actions that created havoc with thousands of flyers, Civil Aviation Minister Jyotiraditya Scindia seemed sympathetic to Go First grappling with the engine problems.

While assuring that the government was helping out as best as possible, Scindia also called upon Go First to make alternative travel arrangements for its flyers to avoid inconveniencing them.

According to Go First the application under the IBC came after the "ever-increasing number of failing engines supplied by PW" which led to the grounding of around 25 of its 61-strong Airbus A-320neo aircraft, or almost 40 percent of its fleet by April 30, 2023.

Go First said in a statement that the groundings due to faulty PW engines increased from 7 percent of its fleet in December 2019 to 31 percent in December 2020 and 50 percent in December 2022, and blamed PW for giving assurances but failing to meet them.

In view of this, the beleagured carrier suffered a whopping loss of nearly Rs 10,800 crore and even demanded Rs 8000 crore as compensation from the PW which could help Go First to meet its financial commitments/obligations.

Besides, Go First had also coughed up Rs 5,657 crore to its lessors in the past couple of years comprising Rs 1,600 crore as lease rent for the non-operational grounded aircraft.

Go First was also hampered by the PW reportedly not honouring the March 2023 award of the Emergency Arbitrator in Singapore to immediately provide the airline with at least 10 serviceable spare leased engines by April 2023 and 10 more per month till December 2023 to enable the carrier to resume full operations, financial rehab and survival.

An aviation official said that after the NCLT processes the Go First application, it could appoint an interim Resolution Professional to take over and re-start operations, adding that a similar exercise in 2019 with another grounded private carrier failed to take-off.

Though Go First`s promoters have pumped in around Rs 3,200 crore in the past three years, coming to a total investment of nearly Rs 6,500 crore, plus support from the government`s emergency credit line guarantee, all this failed to help as the airline kept incurring 100 percent of its operational costs and with a total loss of Rs 10,800 crores, it `succumbed`.

In the NCLT plea, the 17-year-old airline which operated over 32 flights to 29 domestic and 10 international destinations, has sought several interim directions including restraining the lessors from taking back their aircraft, any adverse action by the DGCA, suppliers of essential goods-services, etc.

Since launching low key operations in November 2005 as `GoAir`, Go First gradually climbed up to become the fifth largest private carrier, consistently profitable and expanding till the PW `engine troubles` started from December 2020, hitting its operations and forcing it to ground in May 2023.

However, the owner-promoters have already made it clear that they are keen to revive and not sell the venture or even exit this sector, which has witnessed many ups and downs with the practical `demise` of another 10 airlines in the past 10 years - or average one per annum!

The Go First imbroglio came at a crucial juncture for the country`s aviation sector which was soaring to pre-Covid 19 levels after the harsh pandemic and the ongoing peak summer holidays - and its full impact on the industry remains to be seen.