Go Airlines India faces imminent closure as rescue efforts falter

In a dire turn of events, Go Airlines India Ltd., founded by billionaire Nusli Wadia’s Wadia Group, teeters on the verge of a permanent shutdown. Despite entering bankruptcy protection in May 2023, the airline has struggled to attract a savior, and its Chief Executive Officer, Kaushik Khona, resigned in November 2023, citing insurmountable challenges in getting the carrier airborne and six months of unpaid staff wages.

Jindal Power Ltd., the sole potential buyer under Go’s insolvency resolution process, has opted not to bid, citing uncertainty about the airline’s value. This uncertainty stems from the aviation regulator’s indication that Go’s aircraft should be returned to lessors, leaving the exact number of planes in question.

With 54 Airbus SE A320neos grounded, both Go and Jindal have remained tight-lipped, declining to comment on the unfolding situation. If Go succumbs, it would mark the twelfth Indian airline to collapse this century, exposing the difficulties faced by carriers in the country despite a vast and mobile population.

Financial turmoil and an uncertain future

Go’s creditors, including the state-run Central Bank of India, Bank of Baroda, and Deutsche Bank AG, may resort to selling assets piecemeal to recover debts. As of April 2023, Go owed approximately Rs 65 billion ($780 million) to financial creditors, with total liabilities reaching Rs 115 billion.

Legal expert Sandeep Bajaj, who represented operational creditors in the Jet Airways India Ltd. insolvency case, believes that Go is nearing the point of liquidation. Grounded airlines risk losing vital assets, including landing and parking slots, staff, planes, licenses, and International Air Transport Association codes crucial for scheduling and ticketing.

Harsh Vardhan, Chairman of New Delhi-based Starair Consulting, suggests that the prospect of Go’s revival is bleak. New owners, if any, would need to settle pending dues with various stakeholders, a daunting task that raises doubts about the airline’s resurrection.

Harsh Vardhan, Chairman of New Delhi-based Starair Consulting, suggests that the prospect of Go's revival is bleak. New owners, if any, would need to settle pending dues with various stakeholders, a daunting task that raises doubts about the airline's resurrection.

Challenges in the Indian aviation landscape

The aviation sector in India faces challenges, with IndiGo and a revived Air India tightening their grip, claiming a combined market share of 73%. Despite this, new entrants like Akasa Air have managed to secure a market share of around 4%, carrying over 1.5 million passengers monthly.

The turbulent history of Indian airlines, including the collapse of Kingfisher Airlines and the struggles of Jet Airways, serves as a stark reminder of the industry’s volatility. Go’s failure to establish a niche or reputation, coupled with the burden of high debts incurred during the COVID-induced grounding of jets, has contributed to its impending demise.

In a sector grappling with the aftermath of the global pandemic, the challenges faced by Go Airlines India highlight the delicate balance between operational efficiency, financial sustainability, and the ability to adapt to the ever-evolving aviation landscape. As the fate of Go hangs in the balance, the broader implications for the Indian aviation industry remain uncertain.