Go’s stop: Another lurch towards a seller’s market
A dispute over a contract makes Go First’s insolvency hard to resolve swiftly and the airline’s future look bleak. India’s aviation market won’t brighten up till it achieves a better balance
As with economics, there is no free lunch aboard planes flown by no-frill airlines, but a free lurch is another matter in civil aviation. The latest jolt was Tuesday’s insolvency filing by Go First, an air carrier owned by the Wadia Group. With about half its aircraft unable to fly on account of engine trouble, the company ran short of cash, suspended flights (for three days) and sought to hold off creditors—chiefly lenders and plane lessors—by submitting itself for resolution under India’s Insolvency and Bankruptcy Code (IBC). With its future under a cloud, we should brace for turbulence. The basic purpose of an IBC fix is to find a new owner that can keep the business going or a way to redeploy bits and chunks of its assets. As an asset-shuffler into worthier hands, however, the IBC has been anything but smooth, let alone swift. The case of Go First is complicated by its arbitration battle against Pratt & Whitney’s (P&W) International Aero Engines, whose failure to keep its jets air-worthy stalled operations, according to Go. If anything, this tangle will make its case harder to resolve quickly. And the exit of an airline with a market share of nearly 7% in India would be particularly bad news at a time daily air traffic has been scaling new highs, seat supply already looks stretched and fares rule so high.