Go First, Faces Turbulence as Half its Fleet Grounded and Staff Leaves for Better Opportunities

Go First: In 2005, Jeh Wadia, son of Nusli Wadia, entered the aviation industry at the age of 31; this was also around the time when Vijay Mallya launched his full-service carrier Kingfisher Airlines.

While Kingfisher Airlines did manage to create significant disruptions with many firsts, the same was not the case with Jeh Wadia-led airline.
According to an anonymous source who has worked directly with both Jeh Wadia and his father, Jeh used to tout his airline’s small size as a strength, claiming that it made it agile compared to the larger IndiGo.

However, this approach hasn’t led to success for the airline. Jeh formally stepped down from the airline, and all Wadia Group firms in 2021 and, according to other sources, is currently in London. The source also asserts that Go First was launched without an elaborate business plan and that for Nusli Wadia, it’s just another business that receives equal attention, whereas for IndiGo, for example, it’s their only primary business.

One of the main problems faced by Go First has been its financial performance. The airline has struggled to generate profits, with losses reported in recent years. This has been attributed to factors such as intense competition in the Indian aviation market, high operating costs, and a challenging economic environment.

In addition to financial difficulties, Go First has also faced operational issues such as flight delays and cancellations, which have caused inconvenience for passengers. The airline has been working to improve its operational efficiency and customer service in order to address these issues.
Go First has taken steps to mitigate the impact, such as reducing costs and restructuring its operations; however, little is seen translating to real success.

Wadia, The Billionaire
Wadia, a billionaire who controls a business empire that includes Britannia Industries and Bombay Dyeing, has always maintained tight supervision over the functioning of his companies, including Go First.

However, to dominate the aviation business, having ample resources at disposal may not be enough to make it big in the aviation sector. The same has been aptly put forth by Captain GR Gopinath, the founder of India’s first low-cost carrier Air Deccan, who believes that unless one is obsessed with aviation to the point of madness, one cannot succeed in the industry. According to him, Go First has barely managed to keep afloat, and to create economies of scale and growth for pilots, engineers, and others, one must continue to expand.

Thus, perhaps at some point, Go First realised that even if it did not aim to be the industry leader, it must become a 100-plane airline by 2025-26. In 2019, it even opened nine international stations in one go and said it would add one plane a month over the next few years.

The Pandemic Made It Worse!
The Covid-19 pandemic hit Go First hard, and the airline had to take drastic measures to survive. In 2020, it sent employees on leave without pay, while many other Indian airlines resorted to pay cuts. Go First also renegotiated lease rentals for at least ten planes and negotiated with lessors to delay lease obligations by up to 36 months.

Nusli Wadia committed INR1,500 crore to the airline. He promised to continue doing so as needed, given that Go First is a niche player with a significant portion of its inventory focused on leisure markets. Despite the crisis, the airline remained agile and continued to explore options for growth, such as adding A321neos to its fleet and opening nine international stations in 2019.

Jeh Wadia, Not Concerned
At the time when Jeh Wadia was at the helm, he did not appear to be too concerned about the competition from Ratan Tata’s Air India or Vinay Dube’s Akasa Air.
He observed that turning around Air India would be a significant challenge due to its cost structure, unions, and old fleet. He also noted that Vistara, the Tata Group’s older airline venture, launched in partnership with Singapore Airlines, already had high costs.

As for Akasa Air, Wadia suggested that the new player’s thought process could be similar to that of Dube’s previous company, Jet Airways and that he did not expect Akasa to be a low-cost carrier and compete with Go First.

Go First, Losing CEOs
It seems that Go First has had a turbulent history with CEOs, with at least seven of them leaving the company in the past 17 years. Vinay Dube, the former CEO of Jet Airways, also had a brief stint with Go First that dramatically ended in 2020.

Since then entered the frame, Kushik Khona to lead the airline. Khona was hired at a higher salary than Dube and was granted stock options in 2021.

Go First’s Trouble Galore
The engine issues have significantly strained Go First’s finances, as it has had to cancel numerous flights and lease aircraft from other carriers. The airline has also been facing challenges with its suppliers and vendors, who are reportedly owed substantial amounts of money.

To make matters worse, Go First has been struggling to pay its employees’ salaries on time. In December 2021, the airline reportedly delayed paying its employees’ salaries by over two weeks. The company has blamed the delay on “technical issues” and has said that it is taking steps to rectify the situation.

Despite these challenges, Wadia has remained optimistic about the airline’s future. He has said that the company is working closely with Pratt & Whitney to resolve the engine issues and that he expects the airline to return to full operations soon. He has also said that the airline is exploring new routes and partnerships to expand its business.

Little Positive’s For Go First
However, industry experts have expressed concern about Go First’s ability to survive in a highly competitive market, given its mounting financial and operational challenges. The airline will need to overcome these hurdles quickly if it hopes to remain a viable player in India’s aviation industry.

Go First is facing several challenges due to the grounded planes and delayed aircraft deliveries, as well as the shrinking fleet. As a result, the airline has to decide which flights to drop from its network. However, unlike SpiceJet, which has avoided heavily competitive metro routes, Go First has largely retained these flights. It remains to be seen how the airline will manage these challenges going forward.

What About Consumer Woes, High Attrition Rate?
There seems to be a discrepancy between the company’s official statement and what is being reported on social media. While the official claims that there have been no consumer issues and the loads have been good, there are numerous complaints on social media about flight cancellations and refunds.

The airline may be trying to manage its reputation and downplay the impact of its engine issues on customer satisfaction. However, the fact that the aviation regulator’s report for March did not include any complaints against the airline is a positive sign. It remains to be seen how Go First will continue to navigate these challenges and maintain its brand image in the face of mounting issues.

High Attrition
Several employees of Go First, who went through the pandemic without receiving pay, have started leaving for other airlines, such as Akasa Air and Air India, both of which are currently hiring aggressively.

High On Expenses And Low On Profits
With a workforce meant to operate 60 planes, Go First’s estimated monthly salary bill is around INR 60 crore. However, the airline has incurred a loss of INR 70 crore in monthly revenues due to the grounding of almost half of its planes since August.
Go First is attempting to raise funds from multiple sources to combat this financial setback. One such effort includes securing a loan of INR 300 crore from a Central Bank-led consortium under the central government’s Emergency Credit Line Guarantee Scheme (ECLGS), which aims to alleviate the Covid-19-induced distress in various sectors. The loan has a repayment period of six years with a two-year moratorium.

In Conclusion: It remains to be seen how the airline will navigate its financial challenges now that the ECLGS scheme has ended. With a significant portion of its fleet grounded and competition in the sector set to intensify, Go First faces an uphill battle. Additionally, the bulk of deferred aircraft lease payments will start piling up, posing further challenges for the airline.

This could lead to continual losses for Go First, even in this fiscal year, with one company official saying he expects an INR1700 crore loss in FY23.