Tuesday, May 16, 2023

Go First insolvency crisis: Aviation experts call for tighter regulatory oversight for the sector

As the war of words between the Mumbai-headquartered low-cost carrier (LCC) Go First and the Connecticut-based engine maker Pratt & Whitney shows no signs of abating, aviation experts have urged greater regulatory oversight on Indian carriers to prevent a similar mess from recurring in the future.

As Business Today pointed out in a May 9 story, the crisis at Go First may potentially result in operational costs rising significantly by way of higher risk premiums and additional guarantees on leased aircraft for other Indian carriers. For their part, the airlines would seek to cover such increases through higher fares.

Domain experts have, therefore, sought the regulator Directorate General of Civil Aviation (DGCA) to closely monitor airlines’ performance to identify any red flags in a timely manner.

“The DGCA receives data from all airlines. Now using simple analysis, if an airline shows an even 1 per cent drop in market share over a one to six-month period, there is a reason for DGCA to undertake closer scrutiny,” said the former executive director of Air India, Jitender Bhargava.

Others go as far as to suggest a financial audit than just simple monitoring of month-on-month performance since an airline going bust has ramifications on other stakeholders including other airlines, airports, oil marketing companies and, most importantly, passengers.

“It is time for the regulator to also start conducting a financial audit of airlines. Because in the final analysis, it is the flying public that loses out,” emphasised the managing partner at the aviation services firm AT-TV, Satyendra Pandey.

Already, airfares on routes serviced by Go First have witnessed double-digit increases due to a contraction in capacity.

16/05/2023 Manish Pant/Business Today

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