Go Airlines India Ltd.’s slide into bankruptcy has left travelers frustrated and confused, with many worried about how expensive re-booking tickets may be against the spiraling cost of air fares.
(Bloomberg) — Go Airlines India Ltd.’s slide into bankruptcy has left travelers frustrated and confused, with many worried about how expensive re-booking tickets may be against the spiraling cost of air fares.
The airline, majority owned by billionaire Nusli Wadia’s Wadia Group, is the latest to go under in one of the world’s fastest-growing aviation markets. It blames its fate on the inability of Pratt & Whitney, a unit of Raytheon Technologies Corp., to service and supply engines on time for the Airbus SE jets it flies.
The grounding of Go Airlines is making India’s flying public jittery about how their travel plans may be impacted, especially when daily domestic air passengers in India are nearing records. With a market share of almost 7%, it flies to 34 cities including 7 overseas destinations.
Pratt Engine Woes Blamed for Indian Airline’s Insolvency Filing
Go First — as the airline was re-branded ahead of planned 36-billion-rupee ($440 million) initial share sale last year — has canceled flights until at least Friday, according to its website. But tickets for the most lucrative New Delhi-Mumbai route was showing as “sold out” until May 15, a search shows.
Several people took to social media to search for answers, with worries about high re-booking costs a consistent theme.
Options are relatively limited for customers, according to Ajay Awtaney, the founder of frequent flier website LiveFromALounge.com.
People can either rebook on other airlines and pay a fee to cancel their Go First tickets, or they can wait for their flights to be cancelled and get a full refund, he said.
Few Seats Available
“In the short run, I’d expect airfares to go up even further for now given that all airlines are operating at 90% and only the last few seats are available on the plane,” Awtaney said. “It doesn’t look like the airline will be operating anytime shortly.”
Currently, about half of Go First’s brand-new Airbus fleet is grounded as the planes await engine parts from Pratt & Whitney, which according to Go Airlines has failed to comply with an award issued by an emergency arbitrator. At least two of those planes haven’t flown since 2021, while a further 17 have been out of action this entire year, data provided by Flightradar24.com shows.
Pratt & Whitney has failed to provide any further serviceable, spare leased engines at all despite a court order, and stated that there are none available, according to Go First.
‘Enormous Damage’
That’s meant fund infusion by its owners and support from the government are not enough to “prevent the enormous damage caused by Pratt & Whitney’s defective and failing engines.” the airline said. Pratt has said it is complying with the court order.
India’s airline market is notoriously tough.
Former beer tycoon Vijay Mallya’s Kingfisher Airlines Ltd. folded in 2012 after failing to pay creditors, oil companies and employees, while ex-billionaire Naresh Goyal’s Jet Airways India Ltd. has been struggling for years to take to the skies again under new owners following a court-approved resolution plan, which lenders resisted.
Air India Ltd., which survived on taxpayer bailouts for years, was sold last year to conglomerate Tata Group.
“The jury is out on how this will play out,” Satyendra Pandey, the managing partner of aviation advisory firm AT-TV and a former Go First executive, said. “The trade still speaks of Kingfisher and Jet Airways and both topics routinely come up in negotiations. Whether or not Go First will be added to this lexicon is yet to be determined.”
While Air India’s sale helped established Prime Minister Narendra Modi’s credentials as a leader steering the government’s hand away from businesses, another airline failure could dent his reputation just ahead of federal elections next year. As Covid destroyed travel globally, leading to dozens of airline bankruptcies around the world, India largely stayed away from any outright aviation industry bailouts.
“Go First has been faced with critical supply chain issues with regard to their engines,” India’s Civil Aviation Minister Jyotiraditya Scindia said in a statement. “It is unfortunate that this operational bottleneck has dealt a blow to the airline’s financial position.”
Go Airlines said Pratt refused to comply with an award issued by an emergency arbitrator to provide the carrier with at least 10 usable engines by April 27, and an additional 10 a month until December 2023.
Pratt & Whitney, which spent $10 billion to develop a new engine only to meet with delivery delays and multiple issues leading to midair shutdowns in the past, has disputed the claims.
“Pratt & Whitney is committed to the success of our airline customers, and we continue to prioritize delivery schedules for all customers,” the company said. It declined to comment further because “this is now a matter of litigation.”
Low Lenders Risk
Go Airlines’ bankruptcy isn’t likely to put any major strain on lenders however, analysts at Jefferies India Pvt Ltd. said.
“Based on filings, we understand that loans from banks were between around 20 billion rupees ($244 million) to 25 billion rupees, which is just around 2 basis points of sector loans,” Jefferies analysts wrote in a May 2 note. The “majority of liabilities are as lease liabilities. We see low risk for lenders.”
Go First’s rivals saw immediate gains, at least on paper.
Shares in IndiGo, the nation’s largest airline that’s operated by InterGlobe Aviation Ltd., jumped as much as 8.2% in Mumbai to their highest level in 18 months. Low-cost operator SpiceJet Ltd. rose almost 6%; it unveiled plans to revive 25 grounded plans with the help of a government credit program.
–With assistance from Preeti Singh.
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