May 3, 2023
By: Katya Naidu
Credit: IANS
After attempting to go public several times in the last few years to raise capital, Go First, on Tuesday said that it has been ‘forced’ to declare bankruptcy since its Connecticut-based supplier Pratt & Whitney failed to repair faulty engines or provide sufficient spares.
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Budget carrier Go First has been operating for 17 years now and is owned by the biscuit-to-textile conglomerate controlled by Nusli Wadia. The promoters have infused funds worth ₹3,200 crore into the airline in the last three years, and since inception ₹6,500 crore has been infused into the company.
Credit: IANS
In spite of fund infusions, it hasn’t been able to prevent the ‘enormous damage’ caused by defective engines, it said. It had to ground 50 percent of its fleet while incurring 100 percent of its operational costs. This has set Go First back by ₹10,800 crore in lost revenues and additional expenses, it said.
Credit: IANS
But GoFirst isn’t the first airline to land unceremoniously, neither globally nor in India. From the time private airlines were allowed to fly in India, many ventured into the business with varying levels of success. A few airlines which lived for the short haul were Vayudoot, Darbhanga, Damania, Air Pegasus, Air Costa and Air Carnival. A few were even listed on the bourses.
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State-owned Indian Airlines which ran domestic operations too flew into deep trouble as many challengers entered the fray. It had to be merged with Air India, which was only operating international flights back in 2007. However, the merger also made it debt-heavy and after many attempts, it was sold off to Tata group in 2022.
Credit: Air India
With short crests of profitability and long troughs of losses, airlines are a difficult business to be in. Many global airlines went belly up during the pandemic. While few Indian airlines did ride the lockdowns and travel restrictions, many have faced all means of troubles before and after.
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Air Sahara was founded in 1991 by Subroto Roy, who is now labelled as a Bad Boy Billionaire for his massive Sahara investor scam. The airline however thrived in times when the market had few players, and was even rapidly expanding. The early 2000s were tough for many airlines, and it rapidly lost market to newer players. Jet Airways bought out the airlines and its troubles – a move that proved fatal for the acquirer.
Credit: Air Sahara
After flying unabated as one of India’s premier airlines for 25 years, Jet Airways was grounded in April 2019, a few months before the pandemic. A consortium of lenders led by SBI approached the National Company Law Tribunal (NCLT) over non-payment of dues to the tune of ₹11,261 crore. This does not include what it owes employees and vendors.
Credit: IANS
While many factors led to the eventual downfall of the airline, experts trace it to the acquisition of debt-laden Air Sahara in 2006. Unfortunately, the 2008 financial crisis hit soon after leading to high fuel costs and low demand. Apart from that, the market saw new entrants like SpiceJet and IndiGo in the early 2000s, who rapidly ate into Jet’s market share.
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To fend off competition, the Naresh Goyal-led airline rebranded Sahara as JetLite. It tried to beat low-cost carriers at their game by launching a fare war — resulting in loss of market value and piling losses. By early 2019, its game was up and till date, it has been unable to get back on its feet in spite of a successful sale.
Credit: BCCL
Kingfisher’s troubles are not easily forgotten as its promoter Vijay Mallya has turned a posterboy of bank defaults. Launched with a lot of fanfare in 2003, the airline claimed to provide a premium experience up in the air — a model that never did take off, balance sheet-wise.
Credit: IANS
The company started haemorrhaging money especially after it acquired Air Deccan. The same story of running a low-cost airline along the sidelines, was tried by Mallya without success. Its debt was recast twice but all its net worth was eroded by 2011, and the airline shut operations in 2012 — leaving its employees in tears on the streets, and debtors scrambling to catch Mallya who flew off to London.
Credit: BCCL
The Madurai-headquartered regional airline operated between South Indian destinations from 2005 to 2010 until a legal dispute between the airlines and its aircraft arose. Though the dispute settled, its attempts to come back in 2013 were thwarted by its lenders who wanted their dues settled. In 2016, the CBI registered a case against promoters alleging defrauding, diverting loans, and cheating banks.
Credit: Paramount Airlines