Go First Goes Bankrupt; Cancels Upto 550 Flights For Next 3 Days (What Happens To Your Tickets?)

Sheetal Bhalerao

Sheetal Bhalerao

May 03, 2023

On May 2, cash-strapped airline Go First has decided to cancel all its flights for three days starting from Wednesday.

How Did This Happen?

Earlier in the day, Go First CEO Kaushik Khona said flights will be suspended on May 3 and 4.

Go First Goes Bankrupt; Cancels Upto 550 Flights For Next 3 Days (What Happens To Your Tickets?)

This way, the airline had extended the suspension of operations by one more day, according to the sources.

Earlier on Tuesday, the airline filed for voluntary insolvency resolution proceedings.

Further said that the flights will be suspended for next two days on May 3 and 4.

 Usually, this airline operates around 180-185 flights daily.

Full Refund Of Tickets

Moving ahead, the Go First said it would provide a full refund of tickets amidst uncertainties over its future course.

The airline said, “We regret to inform you that due to operational reasons, Go First flights scheduled for 3rd, 4th and 5th May 2023 have been canceled. We apologize for the inconvenience caused by the flight cancellations,” in a notice on its website.

Further adding, “We acknowledge the flight cancellations might have disrupted your travel plans and we are committed to providing all the assistance we can. We thank you for your patience,”.

Go First is owned by the Wadia Group, which is reportedly reluctant to inject further funds after spending over $300bn already.

Why Would This Happen?

It appears that the cash-strapped domestic airline Go First has been served a ‘show cause’ notice by the Director-General of Civil Aviation after it canceled its May 3 and 4 flights and filed for voluntary insolvency before the National Company Law Tribunal.

According to the regulator, the airline’s actions were not in compliance with the rules – and would lead to ‘passenger inconvenience’ – as it had ‘failed to report in writing the cancellations and reasons thereof.’

So far, the Go First has been given 24 hours to respond to the notice, ‘failing which, the matter (will) be processed ex-parte’, as per the DGCA’s statement.

The Go First chief executive officer Kaushik Khona told news agency PTI the cancellation of flights and the insolvency filing were an ‘unfortunate decision’ and that it ‘had to be done to protect the interests of the company’.

Adding, “… facing a financial crunch due to non-supply of engines by Pratt & Whitney, which has forced the company to ground 28 planes, over half of its fleet.”

The airline – which employs over 3,000 people according to news agency Reuters – 

Further, Go First informed the government and is submitting a report to the DGCA, saying suspended flights will resume only after the insolvency application is admitted.

In this regard, Union aviation minister Jyotiraditya Scindia said the government ‘has been assisting the airline in every possible manner’ and has spoken to stakeholders.

He said, “… unfortunate that this operational bottleneck has dealt a blow to the airline’s financial position. It has come to our knowledge that the airline has applied to the NCLT. It is prudent to wait for the judicial process to run its course,”.

Go First said it had ‘had to take this step due to the ever-increasing number of failing engines’ supplied by American manufacturer Pratt & Whitney.

Unfortunately, these failures had led to the grounding of 25 aircraft as of May 1, 2023, according to the airline.

In case of Go First, it operates on a cash-and-carry model – which means it pays oil marketing companies daily per flight it operates.

 Considering the grounding of flights due to the engine issue, it lacks funds to pay OMCs their dues.

The airline claims that it had been ‘forced’ to apply for insolvency as P&W had ‘refused to comply with an award issued by an emergency arbitrator’, which directed the supply of 10 engines by April 27 and 10 more per month till end-2023.

So far, P&W had ‘failed to provide any further serviceable spare leased engines’, said Go First.

In its defense, P&W said they had no engines available at this time.

It appears that this cash-strapped airline has been struggling to raise funds since posting its biggest annual loss in fiscal 2022. 

Sheetal Bhalerao
Sheetal Bhalerao
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