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In the face of adversity, what does Go First’s financial crisis reveal about the airline industry’s potential challenges?
Go First, formerly GoAir, is an Indian low-cost airline headquartered in Mumbai and owned by the Wadia Group. The airline has been operating since November 4, 2005, and uses Airbus A320 aircraft in an all-economy class configuration. However, as 2023 began, the airline began to face engine supply issues, stemming from the Pratt & Whitney PW1000G engines used by the airline, eventually leading to Go First being out of service on May 3, 2023 and taking it to the National Corporations Tribunal. File for voluntary bankruptcy.
Historical Review
Go Air was founded in 2005 by Jehangir Wadia, the son of Indian industrialist Nasri Wadia. Its business model was originally focused on providing low-cost flying options, with plans to quickly expand its flight network. However, the company has struggled to compete with its then-rivals such as IndiGo and SpiceJet, which had an overwhelming advantage in market share and fleet size.
According to Go First, "Our plan is to focus on profitability, rather than rushing to capture market share."
The root causes of the current crisis
Go First's difficulties are mainly related to supply issues with the Pratt & Whitney PW1000G engines on which its entire fleet depends. Airlines are unable to operate normally due to engine supply interruptions, which not only affects the on-time takeoff and landing of flights, but also leads to large-scale flight cancellations, which has a serious impact on the company's financial status.
Bankruptcy proceedings and future prospects
As Go First files for bankruptcy in 2023, its future becomes even more uncertain. The airline had received interim financing of Rs 425 million at its creditors' meeting in July. The funding was intended to help the airline tide over the difficulties, but soon after, Go First turned to the market for an additional Rs 10 million in emergency funding to stay afloat.
Long-term challenges for the aviation industry
Go First’s case is not isolated. Globally, airlines face challenges including rising fuel prices, emergency funding needs and critical gaps in engine supply chains. These problems not only affect a single company, but also extend to the survival and development of the entire aviation industry.
"Supply chain problems may be the main factor leading to future crises in the aviation industry."
Conclusion
Go First’s story reminds us that as the aviation industry pursues growth and expansion, it must also be prepared to deal with future uncertainties and challenges. Current events have us thinking, can the aviation industry learn from Go First’s challenges to avoid similar woes in the future?
