BW Explains: What Led India’s Third-Largest Airline Into Turbulent Weather

When the Indian aviation market is in the boom stage and has a huge probability to expand in the coming time, India’s third largest airline Go First has filed for insolvency proceedings due to a financial crunch. Go First is that airline owned by the Wadia Group, which is one of the oldest business groups in the country. 

On Tuesday, Go First informed the aviation regulator Directorate General of Civil Aviation (DGCA) that all flights of the airlines will remain cancelled on May 3 and May 4. 

The major breakdown has come due to the obstruction in the supply chain of engines by US-based jet engine manufacturer Pratt and Whitney (P&W) which led to the grounding of more than 50 planes. 

After the airline company made the announcement of flight cancellation, the passengers were agitated and showing up their reactions on social media by tagging DGCA, Go First and Aviation Ministry. The current matter has the involvement of many stakeholders like the airline itself, American jet engine manufacturer P&W, the Government and DGCA, every side reverted in a different manner.

How Did DGCA Respond?

In this regard, DGCA on Wednesday issued a show cause notice to India's low-cost carrier Go First Airlines for not providing prior information about the cancellation of flights on May 3 and May 4 to DGCA. In a statement given to ANI, DGCA said that Go First has cancelled all scheduled flights on 3rd May and 4th May 2023 respectively. No prior intimation has been given to DGCA for such cancellations which is non-compliance with conditions for approval of schedule. 

The show cause notice submitted to DGCA read that India's low-cost air carrier Go First has filed an application with National Company Law Tribunal (NCLT) for resolution under section 10 of the Insolvency Bankruptcy Code. 

While in one of its reports, DGCA unveiled that in January, there were zero passenger complaints against the airline, and it had just a 0.05 per cent cancellation rate. In February, passenger complaints were zero, and the cancellation rate was 0.04 per cent. In March, the cancellation rate was 0.04 per cent, and passenger complaints were zero.

The report added that in January, Go First has a passenger load factor of 90.9 per cent, which increases to 93.1 per cent in February. Although departures decreased from 6,242 in January to 5,619 in February.

What Did P&W Add? 

In all the ruckus created, Go First accused the American engine manufacturing company, Pratt & Whitney. In response, the engine manufacturer hit back by saying that the airline has a "lengthy history of missing its financial obligations."

In one of the statements given to ANI, P&W said, “Committed to the success of our airline customers, and we continue to prioritise delivery schedules for all customers. P&W is complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment further."

What Go First Commented? 

Go First is the third largest airline in India, speaking in one of the TV debates Kaushik Khona, Chief Executive Officer, of Go First said, “It is the worst day, we never dreamt of this day. When I rejoined Go First on 14 August 2022, the vision was to make the airline spring back and make 72 aircraft operational as soon as possible. Unfortunately, American engine manufacturer has completely deceived us. It has been a horrible story for the last 3 years.”

As the airline owned by Wadia group, Khona added, “ Wadia group is known for their longevity in the businesses, but we are pushed to the walls by Pratt & Whitney. We have a lot of obligations to which P&W agreed.”

Talking about the current condition of the airline’s fleet, he said, “As of now, we have 56 aircraft powered by P&W engines and right now operating 55 aircraft.” 

The statement of the CEO, of Go First, implied that due to obstruction in the supply from P&W, half of the aircraft of Go First has grounded. 

What Civil Aviation Minister Noted?

The passengers suffered the most after Go First announced the cancellation of the flights, after which social media witnessed passengers’ reactions and asked for refunds from the government and the airline. Amidst the matter,  Union Civil Aviation Minister Jyotiraditya Scindia stated in an official statement, "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."

He also added, “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."

As the airline company mentioned that the obstruction has occurred due to the supply chain of the engines made by Pratt & Whitney, this situation refers to the high time when the regulators and policymakers need to find an escape from being dependent on foreign companies. India has consistently witnessed a jump in domestic air traffic that is indicating more sectoral growth, and amidst this development, the Indian aviation market cannot afford to lose this opportunity.