In May 2023, Go First, one of the oldest private airlines in India, filed for bankruptcy due to persistent issues with its Pratt & Whitney engines. This event highlights the challenges faced by the civil aviation sector in India. This essay discusses what went wrong for Go First and the issues plaguing the civil aviation sector in India in general.
Go First Insolvency
Go First has claimed a loss of ₹10,800 crore due to the grounding of 30-50% of its fleet since 2020 because of technical issues with Pratt & Whitney engines. The airline also filed an arbitration against the engine maker and won, with an order for 10 engines to be supplied by 27 April. However, the engine makers failed to comply with the award, leading to a sharp reduction in the fleet and unviable operations, ultimately leading to the airline’s bankruptcy.
Challenges Facing India’s Civil Aviation Sector
India has the potential to be among the top three nations in the world in terms of domestic and international passenger traffic, but it is currently ranked 10th. The growth of civil aviation in the country has been hindered by several challenges, including:
Infrastructure Limitations: Except at a few major Indian airports, services provided at most Indian airports continue to be far below global standards. Airport connectivity with cities is extremely limited.
Regulatory Compliance: The government has not reduced the prices of jet fuel in proportion to the fall in international crude oil prices.
Shortage of Skilled Workforce: The incremental human resource requirement of the civil aviation sector by 2025 is estimated to be around 3.3 lakhs. Although many private institutions in the country provide aviation education and training, the courses and infrastructure facilities need improvement to meet industry demands. After obtaining a Commercial Pilot Licence (CPL), pilots must get type-rated, putting a financial burden on them as type rating costs can be of the order of Rs. 25-30 lakhs. Nearly 8000 pilots with CPL have not found regular employment.
High-Cost Structure: The cost of operating airlines in India is high due to the high cost of fuel and airport charges.
Security Concerns: India’s expanding aviation sector brings with it a number of security challenges, including preventing terrorism.
Environmental Impacts: The aviation industry is a significant contributor to greenhouse gas emissions and air pollution.
Way Forward
Given the importance of the civil aviation sector for economic growth in the country, it is imperative for the stakeholders to resolve the issues. The challenges in terms of infrastructure limitations, regulatory compliance, shortage of skilled workforce, high-cost structure, security concerns, and environmental impacts need to be tackled going forward to realize India’s potential.
Improving Infrastructure: Indian airports need to improve services to meet global standards. Airport connectivity with cities must be increased to facilitate easier travel. The government should reduce jet fuel prices in proportion to the fall in international crude oil prices.
Skills Development: Aviation education and training institutions should be improved to meet industry demands. The cost of type rating for pilots should be reduced to make employment in airlines more accessible.
Cost Reduction: To reduce the high-cost structure of airlines in India, the government should consider reducing fuel taxes and airport charges.
Security Measures: Measures should be taken to prevent terrorism in the aviation sector.
Environmental Sustainability: The aviation industry should adopt sustainable practices to reduce its environmental impact.
Important Points:
- 🛬 Go First, one of the oldest private airlines in India, filed for bankruptcy due to persistent issues with its Pratt & Whitney engines.
- 📉 The airline claimed a loss of ₹10,800 crore because 30-50% of its fleet has been grounded since 2020.
- 🏭 Go First alleged that continuing technical issues with Pratt & Whitney engines have led to the loss.
- 💰 The airline also filed an arbitration against the engine maker demanding compensation of ₹8,000 crore.
- 👨⚖️ The arbitration ruled in favour of the airline and ordered 10 engines to have been supplied by 27 April.
- ❌ However, the engine makers failed to comply with the award.
- 🛫 Due to a sharp reduction in the fleet, leading to unviable operations, Go First applied for bankruptcy.
- 🛫 India has the potential to be among the top three nations in the world in terms of domestic and international passenger traffic but is currently ranked 10th in the world in terms of the number of passengers.
- 🛢️ The Government has not reduced the prices of jet fuel in proportion to the fall in international crude oil prices.
- 🛬 Services provided at most Indian airports continue to be far below global standards.
- 🌆 The airport connectivity with the cities is extremely limited.
- 🧑🎓 The growth of civil aviation in the country has been plagued by the shortage of appropriate skills required in different sectors.
- 💼 According to estimates, the incremental human resource requirement of the civil aviation sector by 2025 would be around 3.3 lakhs.
- ✈️ After obtaining a Commercial Pilot Licence (CPL), it is mandatory for pilots to get type-rated in order to get employment in an airline. This puts an enormous financial burden on the pilot having CPL as type rating costs can be of the order of Rs. 25-30 lakhs.
- 🤝 Given the importance of the civil aviation sector for economic growth in the country, it is imperative for the stakeholders to resolve the issues. The challenges in terms of infrastructure limitations, regulatory compliance, shortage of skilled workforce, high-cost structure, security concerns, and environmental impacts need to be tackled going forward to realize our potential.
Why In News
In May 2023, Go First, one of the oldest private airlines in India, declared insolvency due to persistent issues with its Pratt & Whitney engines. In this article, we examine the factors that contributed to Go First’s bankruptcy (formerly known as Go Air) and the challenges confronting the Indian civil aviation sector in general.
MCQ s about Issues Leading to Go First’s Bankruptcy
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What is the reason behind Go First’s decision to file for insolvency?
A. High operational costs
B. Technical issues with Pratt & Whitney engines
C. Reduced demand for air travel
D. Poor management
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What are some of the challenges facing India’s civil aviation sector?
A. Shortage of appropriate skills required in different sectors
B. Lack of airport connectivity with cities
C. High-cost structure
D. All of the above
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What was the reason for Go First’s bankruptcy?
A. Persistent issues with its Pratt & Whitney engines
B. High competition from other airlines
C. Lack of demand for air travel in India
D. Mismanagement of finances
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