Go First, a budget airline based in India has filed for bankruptcy, leaving its employees uncertain about the future of their jobs. The airline has been facing financial difficulties for some time, with employees previously put on unpaid leave and facing delays of up to two months in salary payments.
This has resulted in a great deal of uncertainty among the staff, who are now apprehensive about the payment of their gratuities.
The National Company Law Tribunal is due to hear Go First’s insolvency request on April 4. The collapse of Go First follows similar instances in the Indian airline industry, including Kingfisher and Jet Airways. The current situation leaves approximately 5,000 employees at Go First in a lurch as they are unsure if the airline will resume operations. Even if it does, they are worried about how many of its aircraft will fly and for how long.
Many of the airline’s employees are now looking for work with rival companies such as Air India and IndiGo. The Times of India reported that Go First pilots and other crew members are troubled as they look for employment opportunities. In a logical sequence of events, Air India and IndiGo are receiving job applications in large numbers.
The fiscal predicaments besieging Go First have been compounded by its indebtedness to multiple banking institutions, including Axis Bank, IDBI Bank, and the Central Bank of India. The latter institution is owed the largest sum, with an exposure of INR 2,000 crore. Go First’s insolvency is poised to have a momentous impact on the Indian airline industry, with rival airlines priming themselves to capitalize on the void left by the beleaguered carrier. With a domestic market share of seven per cent, Go First’s stake in the market is up for grabs.
SpiceJet, one of Go First’s competitors, is purportedly preparing to resurrect 25 of its decommissioned aircraft. The airline is utilizing the emergency credit line guarantee scheme (ECLGS) to finance this endeavour. The manoeuvre is part of SpiceJet’s overarching blueprint to commandeer the market share which Go First has relinquished.
The bankruptcy of Go First underscores the urgency for increased support and intervention to protect the future of the Indian airline industry. Airlines have been grappling with significant financial difficulties resulting from the COVID-19 pandemic which has significantly impacted the travel industry. In response, the Indian government has introduced several measures to bolster the airline industry. One of which is the ECLGS, which offers loans to companies impacted by the pandemic.
Despite the existence of these measures, the Indian airline industry continues to face significant challenges. The insolvency of Go First is a clear indication of the scale of the problem at hand. It is imperative for the government to provide further support and intervention to ensure the survival of the sector and safeguard the livelihoods of its employees.
In summation, the bankruptcy of Go First serves as a poignant reminder of the financial struggles confronting the Indian airline industry. The demise of the airline has left numerous employees uncertain about their future, thereby exerting pressure on competing airlines to take up the market share which Go First has relinquished. It is paramount for the government to provide ample support and intervention to safeguard the sector’s existence amidst the ongoing challenges.