Go First has declared itself ‘bankrupt’.Image Credit source: Representative Photo
In the year 1991, when the country’s economy adopted the policy of liberalization, the aviation sector also got its benefit. Apart from the government Air India, private airlines started in the country. After the year 2004, boom was seen in this sector. Many low-cost airlines started simultaneously. But now if we look at the current situation of Go First, it is known that most of the private airlines in the country have a history that they could not even complete their ‘teen age’.
Take Air Sahara of Sahara India family, one of the first private airlines of the country. It started its operation in December 1993 under the name of Sahara India Airlines. In the year 2000, it was re-branded as Air Sahara. After expanding its reach to domestic and international markets, its condition started deteriorating in 2006 itself and in 2007 its business was bought by Jet Airways.
Jet Airways re-branded Air Sahara again under the name ‘Jet Lite’, but its condition also started deteriorating. Its own operation ceased in April 2019, and has yet to restart. If we talk about Air Sahara, then earlier its business could run for 14 years and in the form of Jet Light only for 12 years. In this way the company failed to complete its ‘teen age’ as well.
Mallya’s Kingfisher is a big failure
The biggest case in the failure of private airlines is that of Kingfisher, an absconding industrialist from India. Kingfisher Airlines was formed only in 2003, but its operation started in 2005. Mallya gave a ‘glamorous look’ to the airlines business. It is said that he gave this company as a gift to his son Siddharth Mallya on his 18th birthday. However, this company could not even complete 18 years of its operation.
Kingfisher Airlines was loss making from the beginning. The company took huge loans from Indian banks, but could not reduce its expenses. Kingfisher Airlines acquired the country’s first low-cost airline Air Deccan in 2008 to expand its operations, but the situation remained the same. Finally in 2012 the company’s business came to a standstill.
In this way, Kingfisher Airlines lasted only 7 years in the market, while Air Deccan, which merged with it, also remained in its original operation from 2003 to 2008, that is, only 5 years.
The closure of Kingfisher Airlines was the biggest case of stoppage of private airlines at that time, because the company then provided its service on 128 routes and the number of its employees was around 6000. Later the owner of the company Vijay Mallya also moved from India to London in 2016.
Latest case of Go First
Now the latest case is of Go First Airlines. It also started its operation in 2005. The condition of the company started deteriorating from 2020 itself and now in the beginning of 2023 itself, it has declared itself ‘bankrupt’. If seen in this way, even GoFirst has not been able to complete its teen age and is dying in its 18th year itself.
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Why are airlines failing?
Many things have been common in the reasons for the failure of most of the airlines in India. They are something like this…
- The biggest factor in the failure of airlines is the price war regarding air tickets in the country. In such a situation, the bigger and cash-rich the airlines, the more pressure they can handle. Indigo’s price strategy only worsened the condition of Jet Airways.
- Due to the high competition in the airlines business, the margin is very low, so the company which is unable to crack this business model, that is, cannot control its expenses, fails. Kingfisher Airlines is the biggest example of this.
- Jet fuel price in India also affects airlines operations. Having different tax structures on jet fuel in different states puts pressure on the balance sheets of companies. At the same time, it is difficult to control the price of jet fuel due to dependence on imports.
- Except Jet Airways, most of the airlines that have failed in India is one of the major reasons for the promoters’ focus on doing business other than airlines.
- Sahara India family’s main business is finance and real estate, Vijay Mallya’s core business is brewing and GoFirst Like running a company.
- On the contrary, the main reason for survival of IndiGo and SpiceJet in this market is that they are the only business airlines.