Budget airline Go First files for bankruptcy, Indian Aviation sector alarmed

The Indian aviation sector is experiencing fresh turbulence after the bankruptcy filing of budget carrier Go First, leading to concerns about the shrinking number of airlines and the impact on flight prices.

India being one of the largest aviation markets globally, the reduction in flight operators is creating a dichotomy of increased fliers but limited choices for travelers. The potential collapse of another low-cost airline, SpiceJet worsens the situation, since scarcity of airlines and aircrafts lead to higher ticket prices. Recently, ticket prices on popular routes such as Delhi-Mumbai and Delhi-Pune have skyrocketed, causing financial strain for passengers.

Aviation expert Mark Martin attributes the industry's challenges to growing pains and overheating. The expansion of Go First with the Airbus A320NEO, powered by an untested engine design, has impacted not only the airline but also numerous others globally.

The legal woes and insolvency challenges faced by several Indian airlines have also contributed to the sector's difficulties. The insolvency process involves a complex series of negotiations and payments to various stakeholders, including companies and banks, which can take a considerable amount of time.

The future of the aviation sector raises questions about the effectiveness of initiatives like the UDAN scheme, which aims to develop infrastructure and attract low-cost airlines and foreign direct investment. However, there are concerns about the viability of smaller airports that may struggle to attract sustained airline operations.

Many airlines launched for shorter routes and smaller airports have failed within a year, highlighting the need for a conducive environment for profitability without excessive ticket pricing.