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Go First chief Kaushik Khona has told employees that the airline has been crippled by recurring <keyword id="382682" type="General" weightage="20" keywordseo="Pratt-Whitney" source="Orion">Pratt &amp; Whitney</keyword> engine troubles and assured that the carrier is doing everything possible to navigate the situation with utmost care and concern for all staff. The no-frills carrier has filed an application for voluntary insolvency proceedings and has also cancelled all its flights for three days starting Wednesday. In a message to employees late on Tuesday, Khona said that a terrible crisis has been created by Pratt &amp; Whitney's failure to <keyword id="15312689" type="TOPIC" weightage="60" keywordseo="Supply" source="TOPIC" sourcekeytype="economy,investopedia" meta.keywordsubtype="null" meta.msid="93027566" meta.seopath="s/supply" meta.entityname="Supply" meta.hostid="153" meta.entityid="supply">supply</keyword> engines. For more than 12 months, the airline's management has tried their level best to convince P&amp;W to provide spare engines, repair engines. However, P&amp;W has been stonewalling the discussions, the CEO said, adding that it moved Emergency Arbitration in Singapore. According to the airline, the arbitrator ordered P&amp;W to supply at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December 2023. "With that, the airline would have had all its A320 neo aircraft operational by August/ September 2023... unfortunately, Pratt &amp; Whitney has chosen to defy the order from the Emergency Arbitrator," Khona said in the message. The airline approached the arbitrator, who reinforced the order and since P&amp;W "chose to defy for the second time", it filed enforcement proceedings at a US court seeking implementation of the order, he added. More than half of the airline's fleet is grounded due to engine issues. With a depleted fleet size, Khona said the airline is not able to generate <keyword id="15308831" type="TOPIC" weightage="60" keywordseo="Revenue" source="TOPIC" sourcekeytype="business,investopedia" meta.keywordsubtype="null" meta.msid="92973114" meta.seopath="r/revenue" meta.entityname="Revenue" meta.hostid="153" meta.entityid="revenue">revenue</keyword> for the payment of lessors, and as a result, they are taking coercive steps against the company by invoking letters of credit, grounding notices and demanding return of aircraft. "... The company has been crippled by the recurring Pratt &amp; Whitney engine troubles. Pratt &amp; Whitney's defiance in not supplying spare engines as instructed by the Emergency Arbitrator has ground your company to a halt," he told the staff. Against this backdrop, Khona said there was no other option other than seeking voluntary insolvency resolution proceedings to preserve the company's operations by taking effective steps. Addressing the employees as "Go Getters", the CEO said, "we want to reassure you that we are doing everything possible to navigate this situation with the utmost care and concern for all employees". "I am hopeful that once the application under section 10 of IBC for interim relief is considered, we will be in a better position to update you with a further action plan, as and when we receive orders from NCLT," he added. Section 10 of the Insolvency and Bankruptcy Code (IBC) pertains to voluntary insolvency resolution proceedings and applications in this regard are filed before the National Company Law Tribunal (NCLT). SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/govt-is-positive-centre-to-sc-on-social-benefits-for-same-sex-couples/articleshow/99954180.cms">'Govt is positive', Centre to SC on social benefits for same-sex couples</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zoom-gets-pan-india-telecom-licence-to-offer-telephone-services-to-enterprise-customers/articleshow/99954326.cms">Zoom gets pan-India telecom licence to offer telephone services to enterprise customers</a>

Doing everything possible to take utmost care of employees says Go First CEO

The <keyword id="6354457" type="General" weightage="50" keywordseo="national-company-law-tribunal" source="Orion">National Company Law Tribunal</keyword> (<keyword id="6355809" type="General" weightage="100" keywordseo="nclt" source="Orion">NCLT</keyword>) on Wednesday admitted Go First's voluntary plea to initiate the insolvency resolution process against the airline. A two-member bench comprising President Justice Ramalingam <keyword id="198622" type="General" weightage="50" keywordseo="sudhakar" source="Orion">Sudhakar</keyword> and L N Gupta also appointed Abhliash Lal as interim resolution professional (IRP) to run the debt-ridden company. It has also put the company under the protection of a moratorium and directed the suspended board of directors to assist the IRP to run the company during insolvency proceedings. Besides, NCLT also ordered to keep the company as a going concern and ensure that no employees are retrenched. On May 4, the NCLT reserved its order after hearing the <keyword id="7629" type="General" weightage="50" keywordseo="wadia" source="Orion">Wadia</keyword> group-owned carrier and its aircraft lessors who have opposed the petition seeking interim protection. Go First, which has been flying for more than 17 years, stopped flights on May 3 amid a financial crunch caused by the grounding of more than half of its fleet due to non-availability of Pratt &amp; Whitney engines. With liabilities worth Rs 11,463 crore, the airline has sought voluntary insolvency resolution proceedings as well as an interim moratorium on its financial obligations. Go First has already suspended the sale of tickets till May 15. As many as 28 planes or more than half of the airline's fleet are grounded due to the non-supply of engines by Pratt &amp; Whitney (P&amp;W). The lessors of the carrier have opposed Go First's plea for an interim moratorium contending that it would have "harmful and serious consequences". Besides, Go First is facing two more petitions seeking insolvency proceedings against it. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/tv-audience-is-growing-in-complexity-as-idiot-box-turns-smart/articleshow/100122882.cms">TV audience is growing in complexity as idiot box turns smart</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/mankind-pharma-debuts-in-top-100-as-per-market-value-after-a-stellar-listing/articleshow/100123765.cms">Mankind Pharma enters top 100 companies by market cap after a stellar listing</a>

NCLT admits Go First's plea to initiate insolvency resolution

The domestic air passenger traffic reached 1232.45 lakhs in 2022, registering an annual growth of 47.05 per cent as compared to 2021, the <keyword id="6354705" type="General" weightage="80" keywordseo="directorate-general-of-civil-aviation" source="Orion">Directorate General of Civil Aviation</keyword> (<keyword id="6354787" type="General" weightage="80" keywordseo="dgca" source="Orion">DGCA</keyword>) said on Thursday. "Passengers carried by domestic airlines between January 2022 and December 2022 were 1232.45 lakhs as against 838.14 lakhs during the corresponding period of the previous year thereby registering an annual growth of 47.05 per cent and monthly growth of 13.69 per cent," the aviation regulator said. The passenger load factors of all major airlines - Air India, <keyword id="6358032" type="DOMAIN" weightage="20" keywordseo="spicejet" botkeyword="" source="ET" sourcekeytype="COMPANY" meta.keywordsubtype="EQ" meta.aliasname="spicejet" meta.entityname="Spicejet Ltd." meta.entityid="7876" meta.seoname="spicejet-ltd">SpiceJet</keyword>, <keyword id="12242018" type="General" weightage="80" keywordseo="gofirst" source="Orion">GoFirst</keyword>, IndiGo, <keyword id="11911527" type="General" weightage="80" keywordseo="akasa-air" source="Orion">Akasa Air</keyword>, AirAsia India and Vistara witnessed an upward trend in December 2022 compared to November 2022, as per the DGCA data. The passenger load factor measures the seat capacity utilisation of the airline. IndiGo recorded a market share of 56.1 per cent followed by Vistara with a 9.2 per cent share. SpiceJet and Air India had an 8.7 per cent market share, shows the official data. During December 2022, a total of 408 passenger-related complaints were received by the scheduled domestic airlines. The major reasons for complaints are flight problems and refunds. Airlines have received a total of 408 complaints, out of which 401 (approx. 98 per cent) have been addressed, the DGCA data shows. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/shark-tank-s2-indias-first-plug-and-fly-drones-developed-by-undergraduate/articleshow/97132329.cms">The under-grads who built a business of plug-and-fly drones</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/hul-indusind-bank-adani-enterprises-among-stocks-in-focus/articleshow/97115029.cms">Sensex, Nifty50 end lower on weak US consumer data – FMCG, metals, auto lead losses</a>

Domestic air passenger traffic went up by 47% this year compared to 2021: DGCA

<ul class="summary-list"><li>Akasa Air, an ultra-low-cost Indian carrier, <a href="https://www.reuters.com/world/india/indias-akasa-air-orders-72-boeing-737-max-jets-2021-11-16/">placed</a> a $9 billion order for 72 Boeing 737 MAX Jets last week.</li><li>The airline could potentially lift up the entire Indian aviation segment, industry analysts say.</li></ul>Judith Philip is stressed. The 32-year-old auditor's work schedule is packed and her only retreat is travel, but the pandemic hit her sole recreation badly. To make up for lost time, Philip is pinning her hopes on an upcoming solo trip to Sri Lanka."I think I might do a lot of revenge travel once these restrictions are lifted and things get a bit better," Philip told Insider from the southern Indian city of Bangalore.She is among millions of travelers waiting in the wings to cruise Indian skies as the country's aviation sector braces for a shake-up. At the heart of this shake-up stands to be a freshly minted airline, Akasa Air. Ever since its public debut in July, Akasa has become the most talked-about airline in the country. And on November 16, it <a href="https://www.reuters.com/world/india/indias-akasa-air-orders-72-boeing-737-max-jets-2021-11-16/">placed</a> a $9 billion order for 72 Boeing 737 MAX jets. The airline could potentially lift up the entire Indian aviation segment, which has been grappling for several years, industry analysts say.Unlike <keyword id="11898285" type="UNKNOWN" weightage="60" keywordseo="airlines" source="Orion">airlines</keyword> that ground their fleets in capital Delhi or financial hub Mumbai, Akasa's fleet stands to be mostly based in the Indian tech capital of Bangalore. While Akasa's exact routes have not yet been announced, they are expected to reach less-travelled destinations at less expensive fares.Backed by billionaire investor Rakesh Jhunjhunwala – nicknamed <a href="https://www.forbes.com/profile/rakesh-jhunjhunwala/">India's Warren Buffett</a> and Big Bull for his smart investments — the carrier aims to be the resurrector of a turbulent domestic market in Asia's third-largest economy.But Jhunjhunwala and Akasa are entering the aviation industry at a historically difficult time: The pandemic is far from over, and the market is crowded, plagued by collapsing carriers, and difficult to turn a profit in.Jhunjhunwala did not respond to multiple requests from Insider for comment for this story.<h2>Room for growth</h2>Until the turn of the decade ending 2010, air travel was luxury only affordable for the affluent in <keyword id="11892747" type="UNKNOWN" weightage="60" keywordseo="india" source="Orion">India</keyword>.A country of about 1.4 billion people, India has about<a href="http://www.knowindia.net/aviation7.html"> 650 passenger jets</a>. Domestic airlines carried 144 million flyers in 2019, according to the regulatory body <a href="https://www.dgca.gov.in/digigov-portal/?page=jsp/dgca/InventoryList/dataReports/aviationDataStatistics/handbookCivilAviation/HANDBOOK2018-19.pdf&amp;main4252/4205/sericename">Directorate General of Civil Aviation.</a> By comparison, the US (population 333 million) has over <a href="https://www.faa.gov/air_traffic/by_the_numbers/">5,000 civilian aircraft</a>, while China (population 1.44 billion) operates <a href="http://www.xinhuanet.com/english/2019-07/18/c_138237617.htm">close to 3,700</a> passenger jets.Today, trains remain the preferred mode for the long-distance journeys of the masses in India. In the 12 months <a href="http://indianrailways.gov.in/railwayboard/uploads/directorate/stat_econ/Annual-Reports-2019-2020/Year-Book-2019-20-English_Final_Web.pdf">ending March 2020,</a> Indian trains ferried over eight billion travelers.But as India's middle class grows and competing airlines keep the price of domestic airfare low, air travel is slowly becoming a viable mode of transport for more people. Delhi aims to unveil <a href="https://twitter.com/MoCA_GoI/status/1357015867448455169">over 200 new airports</a> across the vast country in the next four years and is rapidly expanding the existing airports. Prime Minister Narendra Modi's administration expects civil aviation to play a crucial role in its ambitious goal of making <a href="https://www.narendramodi.in/pm-modi-s-aspirational-call-for-5-trillion-dollar-economy-in-5-years-547486">India a $5 trillion economy </a>by 2024."We can expect huge growth in the next five to 10 years," Sanjay Kumar, chief strategy and revenue officer of IndiGo, told Insider of the Indian aviation market. IndiGo is India's market leader in domestic traffic <a href="https://www.ibef.org/industry/indian-aviation/showcase/indigo">with 55% share.</a>"The growing middle-class population will start traveling as the Americans or Chinese do. We've so far not seen this [in India] at all," Kumar added.<h2>A volatile market</h2>Until the second half of 2018, India was home to the fastest-growing aviation market in the world, with passenger numbers ballooning.Growth nosedived in 2019 due to factors including crew shortage, taxes on jet fuel, and unsustainable business models.At the heart of India's spiraling airline crisis was <a href="https://www.businessinsider.com/jet-airways-shuts-down-after-running-out-of-money-2019-4">the collapse of Jet Airways</a>, the country's oldest and first successful private airline. Mounting debts, poor acquisitions, and cheaper prices offered by rivals killed the 26-year-old Jet Airways.The Indian aviation market is so volatile that about <a href="https://en.wikipedia.org/wiki/List_of_defunct_airlines_of_India">50 players have shut shop</a> in the past three decades and changed billionaires into millionaires.And this was all before the pandemic decimated the industry.But a troubled industry also means abundant talent in the market for hire, low asset costs, and weakened competitors, factors that could play a role in Jhunjhunwala's favor.<h2>A market dominated by low-cost carriers</h2>Unlike the aviation markets of the western world, where the segment is multi-layered and caters to a wide range of travelers, carriers in India need to keep a close watch on ticket costs. About 80% of <a href="https://www.dgca.gov.in/digigov-portal/?page=jsp/dgca/InventoryList/dataReports/aviationDataStatistics/handbookCivilAviation/HANDBOOK2018-19.pdf&amp;main4252/4205/sericename">the market share</a> in India is cornered by low-cost carrier models (LCC), which make a profit through volume by selling seats at cheap rates.Six large airlines dominate the domestic skies in India: IndiGo, SpiceJet, GoAir (which rebranded as GoFirst), AirAsia India, Vistara, and Air India. While Vistara and Air India are classified as no-frills carriers, the rest operate as LCC.Unlike all other existing market players, Akasa is an ultra low-cost carrier (ULCC), which means every little space inside the plane – from paper cups or luggage bins — is for sale for advertising. Further, Akasa can cut back on all expendable costs and fly more hours a day while keeping the seat fares separate from all other related services like food. It's basically like the Spirit Airlines of India.Akasa is expected to launch operations by early or mid 2022, if the speculation in the industry is proved right. Akasa has been busy hiring industry veterans including Vinay Dube, the former CEO of Jet Airways, and Aditya Ghosh, the former CEO of Indigo. <a href="https://centreforaviation.com/data/profiles/airlines/akasa">Regulatory approvals </a>are on track.Yet, the fate of Akasa depends on more than a billionaire backer and experienced leadership. Other variables at play in the airline's success include how it manages its fleet composition, distribution models, and the choice of flying destinations.<a href="http://www.knowindia.net/aviation7.html">Airbus dominates</a> the Indian skies: The A320 family makes up 70% of all passenger aircraft in the country.The advent of Akasa means an opportunity for American planemaker Boeing to make a breakthrough in a crucial market.Akasa hopes to operate a fleet of 70 aircraft in four years, ​​Jhunjhunwala told <a href="https://www.bloomberg.com/news/articles/2021-07-28/indian-billionaire-investor-plans-70-planes-for-new-airline">Bloomberg</a> in a television interview in July. Boeing's market outlook, meanwhile, predicts there will be demand for 2,200 commercial jets in the next two decades."In India, domestic traffic is leading the recovery. We're seeing double-digit monthly improvements in operations as vaccine rates improve and travel restrictions begin to loosen," Salil Gupte, president of Boeing India, told Insider.Gupte estimates passenger traffic numbers in India will reach pre-pandemic levels by 2023 or 2024."We are honored that Akasa Air, an innovative airline focused on customer experience and environmental sustainability, has placed its trust in the 737 family to drive affordable passenger service in one of the world's fastest-growing aviation regions," said Stan Deal, Boeing commercial airplanes president and CEO, following the deal.<h2>Challenges Ahead</h2>Industry experts say Jhunjhunwala's Akasa appears set to take Indian civil aviation to new heights, but they add caveats.For instance, fixed costs like lease, parking, maintenance, and staff salaries make up 40% of an airline's cost structure, according to IndiGo's Kumar. To be successful, Akasa must get the combination of these correct, industry experts said."Akasa's bet is on the fragility of one or more carriers and as a well-capitalized new entrant, it may very well be able to gain a strong foothold," said Satyendra Pandey, managing partner at India-based aviation services firm AT-TV.Rival carriers are bound to match Akasa's fares from day one of its operations, Pandey said – which means it'll be entering a profitless growth environment. A careful assessment of the market should incorporate both business and behavioral trends, Pandey said."Force-fitting western frameworks just does not work. Getting this wrong has meant that even extremely well-funded airlines have consistently failed to turn a profit and witnessed continuous margin deterioration. Levers that worked pre-pandemic may not quite work the same," Pandey added."If the ULCC model is implemented, Akasa Air may expand the overall market by stimulation due to low airfares," said Manvi Hooda, chief of consulting and research at the aviation consulting firm, CAPA India."India remains an under-penetrated air travel market. Given India is a value-sensitive market, low airfares can significantly stimulate the market," said Hooda.

A new, ultra-low-cost Indian airline just placed a $9 billion order with Boeing, and analysts say it could lift up the country's entire aviation segment

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Doing everything possible to take utmost care of employees says Go First CEO

PTI

NCLT admits Go First's plea to initiate insolvency resolution

PTI

Domestic air passenger traffic went up by 47% this year compared to 2021: DGCA

ANI

A new, ultra-low-cost Indian airline just placed a $9 billion order with Boeing, and analysts say it could lift up the country's entire aviation segment

Vasudevan Sridharan

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