GoFirst Airline Faces Bankruptcy, Flights Cancelled Until May 19
The National Company Law Tribunal (NCLT) has approved the bankruptcy process application of GoFirst, an airline struggling with financial crisis.
As a result, the management and board of directors have been suspended, and all flights have been cancelled until May 19.
In addition, the NCLT has banned the removal of 7,000 employees due to their inability to pay liabilities of Rs 6,521 crore.
The management has been ordered to deposit Rs 5 crore for interim work.
However, this decision has caused inconvenience to passengers who had booked advance tickets with GoFirst.
The Directorate General of Civil Aviation (DGCA) has ordered the airline to refund the money to passengers as soon as possible, but GoFirst has yet to take specific action.
Travel Agents Association of India (TAAI) Concerned Over Rs 900 Crore Stuck in Advance Bookings
The bankruptcy process of GoFirst has also affected travel agents, with about Rs 900 crore of their members’ money stuck in the airline in the form of advance and refund.
TAAI has approached Civil Aviation Minister Jyotiraditya Scindia and submitted a memorandum requesting assistance in retrieving the money.
The organization has also requested that the laws on refunds be reconsidered, and that the government direct GoFirst to return the entire dues immediately.
TAAI fears that if the refund is not received, the industry and customers will be severely affected.
Why the Money of Travel Agents is Stuck
Travel agents book tickets with budget airlines by paying an advance amount.
The low-cost airlines then create a credit shell for the travel agents, and all tickets are issued from the same amount.
This credit shell remains with the airline, but with GoFirst entering bankruptcy process, this credit shell is stuck.
The reason for such a large amount being stuck is due to the high demand in the tourism sector, especially during summer vacations.
Travel agents book tickets in advance to take advantage of this demand.
TAAI members had booked up to 93% seats in GoFirst flights, resulting in an estimated Rs 900 crore stuck with the airline.
GoFirst Faces Challenges as a Budget Airline
Before cancelling all flights on May 2, GoFirst was operating around 200 flights per day, carrying about 30,000 passengers.
The busiest routes for GoFirst were Delhi-Srinagar, Delhi-Leh, and Mumbai-Goa.
The lack of flights this summer due to bankruptcy may cause non-arrival of passengers, resulting in a significant problem for the tourism sector.
Tour operators have requested that these vacant slots be given to other airlines to avoid losses.
Overall, the tourism sector has hardly recovered from the COVID-19 crisis, and the bankruptcy of GoFirst may have a significant impact on the industry.
