Go First Crisis: Analysts Say Prolonged Flight Suspension Can Help Domestic Rivals, Says Report

Jefferies analyst Prateek Kumar said, "If the suspension is prolonged, other airlines that are adding capacity would look to avail the slots vacated by Go First and grab onto the market share."

According to DGCA data, in the first quarter of 2023, Go First carried 29.11 lakh passengers, which gave them a market share of 7.8 per cent.

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Analysts have said that Go First's bankruptcy will boost airfares and give other domestic airlines a chance to raise their market share, as reported by Reuters. According to the report by the news agency, Jefferies' analyst Prateek Kumar in a client note wrote, "If the suspension is prolonged, other airlines that are adding capacity would look to avail the slots vacated by Go First and grab onto the market share."

The report also noted that on Wednesday, shares of IndiGo, India's largest airline, increased by over 8 per cent following the filing for bankruptcy by cash-strapped airline Go First, which attributed the grounding of approximately half of its fleet to "faulty" Pratt & Whitney (P&W) engines.

"Indigo is facing a similar problem with P&W engines for some of its fleet but has been able to better maneuver the crisis owing to its much larger fleet size and better negotiations with the vendor," Kumar added.

Credit Suisse analysts have suggested in a note that lessors may be interested in allocating some of Go First's aircraft to IndiGo within India due to a similar fleet type. This development could benefit IndiGo by increasing its market share and improving yields in a capacity-constrained environment.

However, Go First Airlines' CEO Kaushik Khona has said that the owner Wadia Group is completely committed to the airline and is not planning to exit.

A report by Mint noted that according to DGCA data, in the first quarter of 2023, Go First carried 29.11 lakh passengers, which gave them a market share of 7.8 per cent. In the same period, Air India and Vistara, both belonging to Tata Group, had a market share of 9 per cent and 8.8 per cent, respectively. Meanwhile, Indigo, a leading low-cost carrier, maintained its dominance with a market share of 55.7 per cent and carried 209.07 lakh passengers in the January-March 2023 quarter.

On Wednesday, the news agency also reported that Go First owes financial creditors Rs 6,521 crore ($798 million), according to its bankruptcy filing. As of April 30, Go First had not defaulted on any of these dues, the filing said. Shares of Go First lenders' including Central Bank of India, Bank of Baroda, IDBI Bank, and Axis Bank dropped 1.1 per cent to 6.8 per cent on Wednesday. 

The Wadia Group, which owns the airline Go First, also has holdings in Britannia Industries, a bread and biscuits maker, and Bombay Dyeing and Manufacturing Co, a textile company. According to the report, following Go First's bankruptcy filing, shares of Britannia Industries dropped up to 1.5 per cent and Bombay Dyeing and Manufacturing Co's shares fell by 5 per cent. Additionally, Bombay Burmah Trading, which is also owned by Wadia and has provided loans to Go First in the form of inter-corporate deposits, saw a 10 per cent decline.