In May 2023, one of the oldest private airlines in India, Go First, decided to file for bankruptcy due to persistent issues with its Pratt & Whitney engines. In this context, we discuss what went wrong for Go First (previously known as Go Air), and what the issues plaguing the civil aviation sector in India are in general. This topic is important from the IAS exam infrastructure and economy perspective.
Go First Insolvency
Cash-strapped no-frills carrier Go Airlines (India) Ltd (Go First) announced it was filing for insolvency with the National Company Law Tribunal (NCLT).
- Pratt & Whitney engines power Go First’s fleet of 54 Airbus A320 aircraft.
- The airline claims a loss of ₹10,800 crore because 30-50% of its fleet has been grounded since 2020.
- It alleges that continuing technical issues with Pratt & Whitney engines have led to the loss.
- The airline also filed an arbitration against the engine maker demanding compensation of ₹8,000 crore.
- The arbitration ruled in favour of the airline and ordered 10 engines to have been supplied by 27 April.
- However, the engine makers failed to comply with the award.
- Due to a sharp reduction in the fleet, leading to unviable operations, Go First applied for bankruptcy.
Challenges Facing India’s Civil Aviation Sector
- India has the potential to be among the top three nations in the world in terms of domestic and international passenger traffic but it has not achieved the position it should have and at present, is ranked 10th in the world in terms of the number of passengers.
- While it is encouraging to note that the domestic demand for air travel has increased considerably in the last few years, the Government has unfortunately done little to actually help it achieve the full measure of its true potential.
- The Government has not reduced the prices of jet fuel in proportion to the fall in international crude oil prices.
- Except at a few major Indian airports, services provided at most Indian airports continue to be far below global standards.
- The airport connectivity with the cities is extremely limited.
- The growth of civil aviation in the country has also been plagued by the shortage of appropriate skills required in different sectors.
- According to estimates, the incremental human resource requirement of the civil aviation sector by 2025 would be around 3.3 lakhs. Although there are a large number of private institutions in the country providing aviation education and training, the courses and infrastructure facilities will have to be improved to meet the demands of the industry.
- It is important to note that after obtaining a Commercial Pilot Licence (CPL), it is mandatory for pilots to get type-rated in order to get employment in an airline. This puts an enormous financial burden on the pilot having CPL as type rating costs can be of the order of Rs. 25-30 lakhs. There are nearly 8000 pilots holding a CPL but who have not found any regular employment. This needs to be addressed on an urgent basis.
- India’s expanding aviation sector also brings with it a number of security challenges – including among them, the prevention of terrorism.
Way forward: Given the importance of the civil aviation sector for economic growth in the country, it is imperative for the stakeholders to resolve the issues. The challenges in terms of infrastructure limitations, regulatory compliance, shortage of skilled workforce, high-cost structure, security concerns, and environmental impacts need to be tackled going forward to realise our potential.
Go First Insolvency [UPSC Current Affairs]:- Download PDF Here
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