India’s fourth-largest domestic airline by passenger numbers has filed for bankruptcy and abruptly cancelled hundreds of flights, blaming a US engine supplier for its failure.
Low-cost carrier Go First is the first leading Indian airline to collapse since 2019, when Jet Airways became the third carrier to go under in a decade. Yet it comes as India’s growing aviation industry has bounced back after the pandemic and hit record passenger levels.
Go First, which is lossmaking and has been flying for nearly two decades, on Tuesday announced it had cancelled all flights from May 3 to May 5, and filed for voluntary insolvency with India’s National Company Law Tribunal.
The airline said it “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney”, which Go First claimed have forced it to ground about half of its 57 Airbus A320neo fleet, and caused it Rs108bn ($1.3bn) in lost revenue and expenses.
Go First also accused Raytheon-owned Pratt & Whitney of failing to follow an order by an emergency arbitrator in Singapore, which directed the company to provide “at least 10 serviceable spare leased engines by 27 April 2023”, and blamed it for making the airline unprofitable.
Pratt & Whitney said it is “committed to the success of our airline customers, and we continue to prioritise delivery schedules for all customers”.
The engine maker added: “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.”
The airline’s sudden bankruptcy is the latest twist in the Indian aviation market, where carriers have historically struggled to live up to their potential. While the UN forecasts India will overtake China as the world’s most populous country this year, its airlines operate less than 20 per cent of the planes flying for Chinese airlines, according to aviation data company Cirium.
But after years of boom and bust, India’s domestic aviation industry has begun to consolidate, with leading airline IndiGo dominating more than half of the market. Go First vies for market share alongside airlines including three carriers partly owned by Tata Group — Air India, Vistara and AirAsia India.
Go First accounted for 7.8 per cent of domestic market share in the first three months of this year, according to official aviation statistics, making it India’s fourth-biggest domestic carrier. It also operated overseas flights from Abu Dhabi to Bangkok.
Go Airlines, which is unlisted, is part of a conglomerate controlled by the Wadia family, which has run businesses in India for more than a century. Go Airlines’ 2021 IPO attempt failed against the backdrop of the coronavirus pandemic, and Go First’s owners have sunk Rs24bn ($300mn) into the airline in the last two years.
Many analysts said Go First’s problems were deep rooted.
Jitendra Bhargava, former executive director of Air India, said Go First “never appeared to be ambitious, aggressive in the market”. Bhargava added Go First had hired and fired a stream of chief executives: “Stability has not been there.”
Independent aviation analyst Neelam Mathews compared Go First unfavourably to market leader Indigo, adding: “Something has gone awry there, you can’t just put it on Pratt & Whitney.”