Travel agents’ grouping TAAI has warned that the recent failure of Go First airlines could push airfares up owing to reduced capacity. Go First has cancelled flights for two days starting May 3, due to an acute financial crunch, caused by the grounding of more than half of its fleet due to P&W engine supply woes. The company filed for insolvency proceedings before the National Company Law Tribunal (NCLT) on Tuesday and has filed for voluntary insolvency resolution proceedings under the Insolvency and Bankruptcy Code (IBC).
The airline industry in India has been particularly vulnerable, with airlines such as Kingfisher and Jet Airways having suffered similar fates in the past. The loss of another airline is a blow to the already fragile industry, as TAAI President Jyoti Mayal pointed out: “It is bad for the (airlines) industry… It is such a fragile industry… we lost crores of rupees in Kingfisher Airlines, in Jet Airways and we have another one going into insolvency (proceedings).”
Go First has been flying for more than 17 years, and the developments come at a time when domestic air traffic is on an upward trajectory. Mayal added that currently, there is high demand for air travel as it is holiday time and “we do expect fares going up in sectors it (Go First) was flying. In the coming weeks, fares are likely to go up.”
As for passengers who have already booked their tickets, Mayal noted that it is the company that has to provide refunds and if it goes into insolvency, the rules are different. “Those are the challenges we are going to be facing.”
According to the summer schedule that is currently in place, from March 26 to October 28, Go First is to operate 1,538 flights per week. The cancellation of flights due to financial woes, and ultimately, insolvency proceedings, will result in reduced capacity, and this could lead to an increase in airfares in the affected sectors.
The TAAI has around 2,800 members, and its warning should be taken seriously by those who are planning to travel in the coming weeks. It is still unclear how the situation with Go First will pan out, but it is certain that the airline’s failure will have an impact on the industry, the passengers, and the employees.
In an effort to reduce costs, the airline has been cancelling flights, including those scheduled for May 3 and May 4. This has resulted in reduced capacity in the domestic air travel market, which could push airfares up, according to the Travel Agents Association of India (TAAI).
The airline’s parent company, the Wadia Group, has filed for insolvency proceedings before the National Company Law Tribunal (NCLT), and the airline has also filed for voluntary insolvency resolution proceedings under the Insolvency and Bankruptcy Code (IBC). The airline has been flying for more than 17 years, and its failure could have significant implications for the domestic air travel industry.
TAAI President Jyoti Mayal expressed concern over the airline’s failure and the impact it could have on the industry. She said that the airline’s insolvency proceedings could lead to a loss of crores of rupees, and pointed out that the industry had already lost significant amounts of money due to the failures of Kingfisher Airlines and Jet Airways. Mayal also noted that the current demand for air travel, particularly during the holiday season, could lead to increased fares on sectors previously served by Go First.
For passengers who have already booked tickets with Go First, the situation is uncertain. Mayal noted that if the airline goes into insolvency, the rules for refunds could be different, which could pose challenges for passengers seeking refunds.
