Indian budget airline Go First has cancelled all of its flights for the next three days after filing for bankruptcy protection.
The carrier says “a full refund will be issued” to affected customers. It is the first major airline in the country to file for bankruptcy since Jet Airways went bust in 2019.
Go First blamed US engine maker Pratt & Whitney for having to ground many of its planes, which it says caused a severe cash flow problem.
The company “had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney,” Go First said in a statement.
Go First said that the problem forced it to ground 25 aircraft – about half of its fleet of Airbus A320neo planes – which caused about 108bn rupees (£1bn; $1.3bn) in lost revenue and expenses.
The airline also accused Pratt & Whitney of not following an order by an emergency arbitrator, which included supplying “at least 10 serviceable spare leased engines by 27 April 2023”.
In response, Pratt & Whitney said it was “complying with the March 2023 arbitration ruling” and it cannot comment further as “this is now a matter of litigation”.
India’s Civil Aviation Minister Jyotiraditya Scindia said: “The government of India has been assisting the airline in every possible manner.”
The National Company Law Tribunal has agreed to hear Go First’s bankruptcy plea on 4 May.
Go First filing for bankruptcy is expected to give a boost to rival airlines such as Indigo, Air India, SpiceJet and new entrants like Akasa Air to grab a larger chunk of the market share. Aviation stocks listed on the country’s stock exchanges rallied in trade on Tuesday.
Fares on the routes that Go First flies are expected to see a sharp rise in the next three-four months, especially since it is the peak travel season with school holidays in India beginning this month.
However, problems with engines and aircraft supply chain issues are affecting all operators and will keep the industry on its toes, say aviation experts.
According to data from aviation analytics firm Cirium, 102 commercial aircraft are grounded in India. They include 60 planes of Go First and Indigo that are grounded for a lack of spare parts.
The next few months will see a crunch as supply of new planes is slow and engine supply chain is still plagued, said an aviation analyst who did not wish to be named.
However, in the long run, the growth story of Indian aviation market would remain intact, he added.
According to the Centre for Aviation estimates, India is expected to see domestic traffic rise to 350 million passengers by 2030 from 137 million now.
The collapse of Go First, which is owned by Indian conglomerate Wadia Group, underscores the fierce competition in the country’s airline sector.
In November, India’s second and third largest carriers – Air India and Vistara – announced that they planned to merge.
In 2019, Jet Airways, which was at the time one of India’s biggest airlines, was grounded after struggling with more than $1bn (£800m) of debt.
It has so far been unable to restart operations and is facing a lengthy insolvency process.
