Aviation regulator Directorate General of Civil Aviation (DGCA) has directed Go First Airlines, which filed for bankruptcy on Tuesday, to process the refunds to passengers as per the timelines specifically stipulated in the relevant regulation.
The airline in a statement later said, “There will be no sale of tickets till May 15. Airline working on refunding or rescheduling already-booked tickets”.
Meanwhile, Go First has also responded to the DGCA’s show cause notice, which was issued on Tuesday after the airline cancelled flights without any prior notice due to a lack of funds and its voluntary bankruptcy filing.
In response, the airline stated that it is working to provide refunds or rescheduling options for passengers who have already booked to fly with them.
According to a DGCA official, Go First informed the DGCA that they have filed an application under Section 10 of the Insolvency Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT).
The airline also stated that it has suspended scheduled flight operations for three days starting from Wednesday and will take further action based on the outcome of the application before the NCLT.
After examining Go First’s response, the DGCA chief issued an order under the current regulations instructing the airline to process refunds for passengers within the prescribed timelines.
The DGCA official added that the organisation is committed to reducing passenger inconvenience caused by Go First’s sudden decision to suspend operations without any prior notice.
Go First has extended the cancellation of its flights until May 9, following its voluntary bankruptcy filing.
Go First has earlier cancelled all its flights for three days starting from May 3. However, the latest statement indicates flight operations may not resume till May 16.
The Wadia group-owned carrier has also moved to the National Company Law Tribunal, seeking various interim directions, including restraining lessors from taking back aircraft and regulator DGCA from taking any adverse action against the airline.
Crisis-hit Go First which has liabilities worth Rs 11,463 crore, has sought voluntary insolvency resolution proceedings and the plea is set to be heard by the Delhi bench of the NCLT on Thursday.
In its petition filed before NCLT, the budget airline has sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions.
Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company.
The airline also wants fuel suppliers to continue supply for aircraft operations and not terminate the present contractual arrangements.
Go First, which started flying more than 17 years ago, has said the non-supply of engines by Pratt & Whitney resulting in the grounding of more than half of its fleet has led to the current situation.
The carrier has total liabilities of Rs 11,463 crore to all creditors, including a default of Rs 3,856 crore towards operational creditors.
The dues towards aircraft lessors is Rs 2,600 crore, according to the plea filed before NCLT.
As on April 30, the debt exposure towards financial creditors stood at Rs 6,521 crore.
The airline’s net loss rose to Rs 3,600 crore last fiscal from Rs 1,807.8 crore in 2021-22. The net loss was at Rs 1,346.72 crore in 2020-21.
Further, Go First has cited the example of Jet Airways, saying that lessors took swift re-possession of the planes leading to serious depletion of its asset value.
Citing Jet Airways, the Wadia group firm said prior to insolvency, it had a fleet size of 112 aircraft.
However, after the insolvency was triggered against Jet Airways, it was left with only 11 aircraft, which significantly affected its prospects of resolution under IBC, said Go First.
CIRP refers to Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC).
Go First has a domestic market share of around 8 per cent.
With Air India, AirAsia and SpiceJet already reeling under financial stress, if Go First is not resolved, then it will further monopolise the market leading to loss of consumers and all the stakeholders, it said.
(With PTI Inputs)
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