'Need 4 strong airlines': Aviation veteran Sanjiv Kapoor weighs in on GoFirst bankruptcy

GoFirst bankruptcy: Aviation veteran and outgoing Jet Airways CEO-designate Sanjiv Kapoor said in a recent Twitter thread that India needs at least four strong airlines while adding it is sad to see another airline suspend its operations. He added these developments in the aviation industry are not good for consumers and would lead to the concentration of a large market.

The outgoing Jet Airways CEO-designate said: “It is sad to see another airline suspend operations. This is in addition to the lengthy delays in getting Jet off the ground again. This is not good for consumers, to be heading towards concentration of such a large market to just 2 or 3 players. Need at least 4 strong airlines”.

Kapoor added there should be at least two strong full-service carriers (FSCs) and two or three low-cost carriers (LCCs) in such a large market. He then went onto explain that these “strong” airlines should be well-capitalised, well-managed that can run operations safely and efficiently.

Kapoor explained: “By ‘strong’, I mean well-capitalised, well-managed airlines that run safe, reliable, and efficient operations with well-maintained aircraft, well-trained staff, and consistency of service, creating customer preference and thereby creating value for all stakeholders”.

The aviation industry stalwart also complimented GoFirst for always operating well-maintained aircraft despite all its challenges in the recent past. “Despite all its troubles in recent years, Go Air/Go First always operated that were well-maintained and with cabins that were clean and in good shape. Kudos to the management for ensuring that despite all challenges”.

Kapoor's comments came a day after GoFirst filed for insolvency resolution on Tuesday. The airline said it can no longer continue to meet its financial obligations and blamed US-based engine maker Pratt & Whitney's (P&W) faulty engines for grounding 50 per cent of its fleet. 

Earlier in the day, Pratt & Whitney (P&W) said Go First has a long history of missing its financial obligations. P&W officials told news agency ANI: “Go First has a lengthy history of missing its financial obligation to Pratt”.

GoFirst also cancelled all its flights scheduled on May 3, 4, and 5 citing severe financial constraints. The airline is grappling with cash crunch since almost half of its fleet is grounded. At present, only 28 aircraft is operating of the 57 aircraft fleet owned by the airline. 

GoFirst owes five banks a total of over Rs 6,500 crore. These banks are Central Bank of India, Bank of Baroda, IDBI Bank, Axis Bank and Deutsche Bank. The company also deferred its IPO many times before ultimately filing for insolvency. 

Due to the Go First crisis, shares of Central Bank of India, Bank of Baroda, and IDBI Bank reported massive slides on Wednesday. Shares of Central Bank of India, which settled at Rs 30.20 on Tuesday, tumbled about 7 per cent to Rs 28.16 on Wednesday, while Bank of Baroda plunged almost 4 per cent to Rs 188.10 compared to its close at Rs 188.10 in the previous session. IDBI Bank shed 3 per cent to Rs 53.20. 

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