Go First insolvency: Skyrocketing airfare, threat of duopoly, leaves flyers vulnerable

Single day domestic air traffic in India reached its all time high with 4.5 lakh passengers flying across the country on April 30, 2023. This was just days before one of India's most popular budget airline Go First decided to cancel flights for days, before applying for voluntary insolvency due to an engine shortage.

Things have taken a drastic turn with an airline holding 9 per cent market share getting grounded, as demand for air travel surges past pre-pandemic levels.

A major void in Indian skies

• This lack of availability when more flights were needed, has triggered a 50 per cent surge in airfare on the routes serviced by Go First.

• The airline has stopped taking bookings as its future looks uncertain, and another carrier SpiceJet face insolvency, as one of its aircraft lessors has filed a complaint for non-payment of dues.

• Currently, ticket prices on the Delhi-Chandigarh route, have skyrocketed from Rs 4,000 to Rs 24,000.

• If two major airlines servicing 15 per cent of India's aviation market disappear in quick succession, it will lead to a dramatic rise in ticket prices.

Left vulnerable with few options

• Netizens have been complaining about the sudden spike in airfare caused by Go First's absence, and others are also reporting a delay in processing refunds.

• Go First's cancellations also came at a time when families across India had planned trips for summer vacations, and had no option but to book costlier tickets at short notice.

• Months after a parliamentary panel urged the government to cap prices to prevent inexorbitant rates in times of high demand, the fears of predatory pricing may come true.

Employees left in a lurch

• As passengers are going to bear the brunt of price hikes, employees at Go First are vulnerable as operations have been halted at least till May 15, 2023.

• The way staff at Kingfisher and Air India among others had to fight for their salaries after airlines shut down, has set a precedent that is bound to make Go First's crew anxious.

• The walk-in interviews for Air India had to be extended by another day in Gurugram, as pilots flocked to the venue amidst the Go First crisis.

• IndiGo and Visatara have also scaled up recruitment, even as reports suggest that Go First has refused to allow early release for employees seeking other opportunities.

Rivals swooping down on aircraft

• Apart from the crew leaving Go First, its rivals are also eyeing Airbus aircraft from the fleet which remains grounded as of now.

• According to reports, Air India and IndiGo have both held separate negotiations with Go First's lessors, who are left in a lurch after its insolvency application.

• Although the lessors are well within their rights to repossess aircraft and provide them to Go First's competitors if lease isn't paid, the airline has requested a moratorium on the same from the NCLT.

Staring at duopoly?

• As Jet Airways' return is still awaited, the exit of Go First and the possibility of SpiceJet following suit, will leave four players in control of 95 per cent market share.

• Once Air Asia and Vistara are merged with Air India, only two carriers will control an overwhelming share of the Indian aviation space, creating the risk of a duopoly.

• In such a scenario airlines will have more power over pricing and this could further leave flyers across the country in a vulnerable position.