India’s aviation sector faces another tumultuous period as Go Airlines India Ltd. nears a potential shutdown, grappling with financial turmoil and the departure of its Chief Executive Officer, Kaushik Khona. The carrier’s bleak future came to light after failed attempts to attract rescue bids following its entry into bankruptcy protection in May.
Khona’s resignation at the end of November cited the inability to restore flight operations and the non-payment of staff salaries for six months. The airline’s flight attendants and pilots have started exploring alternative employment opportunities elsewhere, compounding the airline’s crisis.
Recent announcements from Go Airlines India Ltd. confirmed the extension of its flight cancellations until February 4, marking a continuation of its grounding since May. Despite having a significant market potential with a vast and increasingly mobile population, the carrier struggled with high operational costs, especially fuel expenses, while needing to maintain competitive fares.
Jindal Power Ltd., previously seen as a potential buyer during the insolvency resolution, declined to bid. Reports suggest that the uncertainty around Go Airlines’ fleet status, as indicated by aviation regulators’ directives to return aircraft to lessors, hindered potential valuation assessment.
The airline, owning 54 Airbus SE A320neos, has remained unresponsive to queries, while Jindal Power Ltd. refrained from commenting on the matter.
If Go Airlines collapses, it would join a list of 12 Indian airlines that have ceased operations in this century despite the country’s vast potential for air travel. Financial liabilities as of April totaled approximately 65 billion rupees ($780 million), with total liabilities reaching 115 billion rupees.
The company’s creditors, including Central Bank of India, Bank of Baroda, and Deutsche Bank AG, might seek asset liquidation due to the stalemate in the resolution process. Legal experts, citing similarities with the case of Jet Airways India Ltd., anticipate potential challenges in reviving the airline.
Grounded airlines risk losing critical assets such as landing slots, staff, and licenses, adding complexity to any potential revival efforts. Harsh Vardhan, chairman of New Delhi-based Starair Consulting, expressed skepticism about Go Airlines’ revival prospects, emphasizing the necessity for clearing pending dues to various stakeholders.
While India’s dominant carriers, IndiGo and Air India Ltd., continue to expand their market shares with substantial aircraft orders, smaller airlines like Akasa Air, supported by billionaires, have struggled to gain significant traction. Past instances, including Kingfisher Airlines and Jet Airways, underscore the challenges faced by airlines in the Indian market.
Established in 2005 by billionaire Nusli Wadia’s Wadia Group, Go Airlines ventured into high debts amid the pandemic, affecting its operational capabilities. The COVID-19 pandemic and supply chain disruptions compounded the airline’s woes, leading to grounding issues and financial strain.
The inability to carve a distinctive identity or match the efficiency of competitors like IndiGo and Air India further impeded Go Airlines’ prospects. Industry experts suggest that any potential revival window for the carrier has significantly shrunk, making the chances of restoration increasingly improbable.
Sources By Agencies
