Despite India being the third-largest and one of the fastest-growing aviation markets in the world, many airlines have failed in the country. These airlines either collapsed or were sold due to financial crunch, debt, and mismanagement. Go First is the latest victim of the unforgiving Indian aviation market.
Indigent and cash-strapped Indian Airline Go First formerly known as Go Air had filed voluntary insolvency with the National Company Law Tribunal (NCLT).
The company states that it was forced to file for voluntary insolvency because of “faulty” Pratt and Whitney engines which then led to the airless grounding majority of their flights. The CEO said that the insolvency was to revive the airline and not to sell it and confirmed that the owners had no plans to exit the airline.
The move forced the Directorate General of Civil Aviation (DGCA) to issue a notice which asked the airline to work on a refund of rescheduled flights for future dates. It also said that it is closely observing the ongoing arbitrations. However, many flyers complained that they did not receive a refund or have received only partial refunds.
Go First’s crisis has also impacted the Indian aviation industry which is already battling high demand for pilots. In March, air travel became costlier by up to 12.82 pc as the government raised caps on domestic airfares. Now, the shortage of flights on domestic routes is another concern.
Now the question is: Will this airline be able to recover itself or lose face in the Indian aviation market?
There might be a glimpse of hope for revival of this airline, under the NCLT voluntary solvency process which means that the company has accepted its business, is insolvent and the company cannot pay any debt at this period of time frame and requires help to sort all this matter out, and thus also safeguards the company from lessors to repossess their aircraft.
And while insolvency and bankruptcy may sound the same, they are not. Insolvency is a financial state whereas bankruptcy is a legal declaration. Go First was granted bankruptcy protection by the NCLT.
However, this did not go well with the global aviation leasing watchdog, Aviation Working Group (AWG) – a non-profit entity co-chaired by Airbus And Boeing that monitors leasing and financial laws on behalf of plane-makers and lessors, which has put India on a watch list with a negative outlook.
The development follows the National Company Law Tribunal admitting Go First’s insolvency petition and granting it a moratorium, as a result of which lessors who wanted repossession of their aircraft, can’t do the same. Citing the instance, AWG has said that India has failed to comply with international aircraft repossession norms and this has turned India’s aviation into a negative outlook and score which may in turn cause ripple effects in the future on other Indian carriers because of the same.
Hence, it is at absolute best for the government to expedite resolution for the same, that “The Go First Mayhem” will not affect India’s aviation sector as a whole in the future.
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