GoAir Airline started by Wadhia Group is based out of Mumbai, Maharashtra and is a budget friendly flight. It has an 8.4% passenger market share. GoAir announce that they are canceling all of their flights for 3 days (3rd to 5th May, 2023). May being the holiday season there is higher demand and the cancelation would affect an approximate of 90,000 people. DGCA had approved 22,907 flights for this summer and out of that 1,538 flights were supposed to be of GoAir.The Director General of Civil Aviation (DGCA) has asked valid grounds for this cancellation and has asked to resume the flights as soon as possible.
As a reply on Tuesday, GoAir filed for bankruptcy and they are blaming the US engine-maker Pratt & Whitney for delaying the delivery of their supply. In 287 years of the existence of the airline industry, GoAir is the first to declare bankruptcy and third major airline that has collapsed after Kingfisher and Jet.
In another statement the airline also mentioned applying to NCLT, where the plea once admitted the court would appoint an Insolvency resolution professional who would take over Go First’s operations.
Industry insiders also blame the airline’s insolvency on shareholders’ reluctance to inject capital. According to the airline, promoters have spent 3,200 crore in the last three years, bringing the total promoter investment since the carrier’s establishment to 6,500 crore.
The airline has requested around 8,000 crore in compensation in the SIAC arbitration, and has stated that if the arbitration is successful, it would be able to pay its creditors. However, some lessors have already begun repossessing some of the airline’s aircraft, withdrawn letters of credit, and notified the airline that more aircraft will be removed from Go First’s custody, severely limiting the airline’s ability to continue operations.
In its show cause notice to the airline, the DGCA gave it 24 hours to discuss what measures have they carried out and to present its plan of action to resume flights.
The development comes at a time when Jet Airways’ insolvency proceedings, which ended in 2019, have so far failed to resurrect the airline over payments to lenders.
Written by- Gunjan S Jain, 5th Year BBA LLB, St. Joseph’s College of Law intern under legal vidhiya
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