India needs 4 strong airlines: Sanjiv Kapoor

Amid the insolvency filing by low-cost carrier Go First, formerly known as Go Air, Sanjiv Kapoor, former Jet Airways CEO, says that the domestic aviation industry needs at least four strong airlines. According to Kapoor, at least two strong full-service carriers (FSCs) and two or three strong low-cost carriers are required in a complex and large-sized market like India.

"It is sad to see another airline suspend operations. This is in addition to the lengthy delays in getting Jet off the ground again. This is not good for consumers, to be heading towards the concentration of such a large market to just 2 or 3 players. Need at least 4 strong airlines," Kapoor says in a Twitter thread on Wednesday.

"There needs to be at least two strong FSCs and two or three strong LCCs in a market of this complexity. By “strong” airlines I mean well-capitalised, well-managed airlines that run safe, reliable and efficient operations with well-maintained aircraft, well-trained staff, and consistent service, creating customer preference and thereby creating value for all stakeholders," he adds.

As of March 2023, IndiGo held a 56.8% market share in the domestic aviation industry, followed by Tata Group-owned Air India and Vistara, which hold 8.8% and 8.9% market shares, respectively. Ajay Singh-owned SpiceJet had a market share of 6.4%, whereas Nusli Wadia-owned Go First had a market share of 6.9%, according to the latest DGCA data.  

In response to a tweet asking if operational costs by airlines in India are too high, Kapoor says, "They had it coming due to poor brand image and being notorious for delays and cancellation."

On the bankruptcy filed by Go First, Kapoor hails the airline's management for being operational despite challenges. "Despite all its troubles in recent years, Go Air/Go First always operated aircraft that were well-maintained and with cabins that were clean and in good shape. Kudos to the management for ensuring that despite all challenges," Kapoor says.

Kapoor’s remarks come a day after the Nusli Wadia-owned Go First filed for insolvency resolution with the National Company Law Tribunal (NCLT) citing repeated failures of Pratt & Whitney engines. According to the low-cost carrier, the grounding of close to 50% of the airline's A320 neo fleet due to the 'serial failure' of Pratt & Whitney engines has set the airline back by ₹10,800 crore in lost revenues and additional expenses.

Responding to the allegations by Go First, Pratt & Whitney says that the low-cost carrier has a 'lengthy history of missing' its financial obligations to the engine maker. "Pratt & Whitney is committed to the success of our airline customers and we continue to prioritize delivery schedules for all customers. Pratt & Whitney is complying with the March 2003 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment," ANI quoted Pratt & Whitney as saying.   

The Singapore International Arbitration Centre (SIAC) had earlier directed Pratt & Whitney to release and dispatch without delay at least 10 serviceable spare leased engines to Go First by April 27, 2023 and a further 10 spare leased engines per month until December 2023.

According to Go First, the additional consequence of Pratt & Whitney’s actions has also driven some lessors to repossess aircraft, draw down letters of credit and notify further withdrawal of aircraft. The low-cost airline has paid ₹5,657 crore to lessors in the last two years of which around ₹1600 crore was paid towards lease rent for non-operational grounded aircraft from the funds infused by the promoters and the government’s Emergency Credit Line Guarantee Scheme.