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Go First crisis will push up fares
Airline has filed for insolvency proceedings, grounded flights for 3 days
No-frills carrier Go First filing for insolvency proceedings and cancelling flights is bad for the airline industry as the move will reduce capacity and could push airfares in certain routes, travel agents' grouping TAAI said on Wednesday.
Bogged down by an acute financial crunch due to grounding of more than half of its fleet amid P&W engine supply woes, Go First has cancelled flights for three days starting May 3. Besides, the Wadia group-owned airline has filed for voluntary insolvency resolution proceedings under the Insolvency and Bankruptcy Code (IBC).
“It is bad for the airlines industry. It is such a fragile industry. We lost crores of rupees in Kingfisher Airlines, in Jet Airways and we have another one going into insolvency (proceedings),”Jyoti Mayal, president, Travel Agents Association of India (TAAI). The developments at Go First, which has been flying for more than 17 years, also come at a time when the domestic air traffic is on an upward trajectory. Mayal said that right now there is demand for air travel as it is holiday time and “we do expect fares going up in sectors it (Go First) was flying. In the coming weeks, fares are likely to go up.”
Regarding booked tickets, she said it is the company that has to provide refunds and if it goes into insolvency, the rules are different. “Those are the challenges we are going to be facing.”
In a statement, TAAI expressed concern over the sudden cancellation of flights by Go First. “The cancellations and refunds of tickets to its members and consumers have raised concerns at TAAI, who fear that travel agents will be adversely affected, presenting a significant financial blow as they struggle to revive post Covid,” it said.
TAAI also said it has been asking for measures to address airline defaults. “The association has been advocating for protection through insurance on tickets or placing monies in an escrow account with the government as protection for the entire ecosystem,” it said.
