While India’s largest airlines, IndiGo and Air India, have been attracting headlines due to their ambitious growth plans, some of the country’s other airlines are grappling with serious financial challenges.

Air India’s recent moves to order 470 aircraft signal it is back in expansion mode, and rival IndiGo has about the same number of aircraft remaining on its orderbooks. Both are looking to tap into the strong demand potential in the Indian market, but their growth strategies also will put more pressure on India’s smaller carriers.

• Go First opts for voluntary bankruptcy protection to gain breathing room
• Lessors look to reclaim aircraft from troubled low-cost carriers

Many of these airlines are already in difficulties. Go First has entered voluntary bankruptcy, due in large part to long--running fleet problems. SpiceJet is mired in court disputes as aircraft lessors seek unpaid fees, and Jet Airways faces more hurdles in its efforts to keep its relaunch hopes alive.

As competition continues to heat up in the Indian market, the question is whether all these players can survive, or whether further consolidation will occur among the smaller ones.

India’s scheduled systemwide capacity as of May 1—just before Go First suspended flights—shows that IndiGo had by far the largest share with 45.7% of weekly seats, according to data from CAPA – Centre for Aviation and OAG (see chart).

Three airlines in the Tata Group are next: Air India with 10.1%, Vistara with 6.1% and AirAsia India with 5.2%. Together, these carriers accounted for a 21.4% share of the Indian domestic market.

In the next tier, Go First had a 5.1% share and SpiceJet provided 4.6% of weekly seats. Jet Airways is not operating yet, and newcomer Akasa Air is accounted for in the “others” category with less than 3%.

India’s airlines have a total of 930 aircraft on order, according to CAPA’s fleet database. IndiGo has the largest share, with 492 aircraft remaining in its orderbook. The countrywide total does not yet include the 470 aircraft recently announced by Air India.

SpiceJet has 155 orders left, Go First has 88, Akasa is next with 51, and Vistara accounts for 12. The future of Jet Airways’ orders for 132 Boeing aircraft remains uncertain.

Go First is probably in the most tenuous position of the Indian carriers. The low-cost carrier filed for voluntary bankruptcy protection on May 2 and suspended operations.

The airline filed an application with India’s National Company Law Tribunal (NCLT) for resolution under Section 10 of the Insolvency Bankruptcy Code. On May 10, the NCLT accepted the application and appointed an interim resolution professional to oversee the company.

As part of its bankruptcy filing, Go First asked the NCLT to impose a moratorium on any seizure of its assets, which the NCLT approved. Go First said it intends to resume operations in the near future, adding that the moratorium will give it time to address its financial problems. This also will block the efforts of lessors that are attempting to reclaim their aircraft from the carrier.

Multiple lessors have submitted irrevocable deregistration and export request authorizations (IDERA) against Go First’s aircraft, a necessary step to reclaim them. By May 10, the list of aircraft covered by the IDERA requests had grown to more than 40.

Another potential hurdle emerged when the Directorate General of Civil Aviation (DGCA) said it would consider whether to allow the carrier’s air operator certificate (AOC) to remain active.

Go First has blamed its predicament primarily on issues with Pratt & Whitney geared turbofan engines that have caused it to ground a large proportion of its aircraft (see page 16). Before suspending flights, the carrier had 25 aircraft grounded—about half its fleet—because of the engine problems and delays in repairing them or obtaining replacements. Several other airlines also have had to park aircraft for this reason.

Go First says 7% of its fleet was grounded due to engine problems in December 2019, a figure that rose to 31% in December 2020 and 50% by December 2022.

The carrier estimates it has lost 108 billion rupees ($1.3 billion) in revenues and incurred additional expenses because of the engine-related groundings. It is seeking compensation worth 80 billion rupees from Pratt. However, Pratt has rejected the notion that it is responsible for Go First’s financial condition and says it will defend itself against the claims.

Meanwhile, SpiceJet is confronting its own court challenges by creditors and lessors as it grapples with significant debt and liabilities. For example, lessor Aircastle has sought to launch bankruptcy proceedings against SpiceJet through the NCLT due to its claim for unpaid lease fees. However, the airline says it is confident it can reach a settlement with Aircastle.

Other lessors also have filed claims against SpiceJet with the NCLT. In some cases, they have submitted IDERA requests with the DGCA to reclaim aircraft. Five such IDERA claims were submitted in the week of May 8.

SpiceJet reported a net profit of 1.1 billion rupees for the three months through Dec. 31, 2022, its fiscal third quarter. However, it still recorded a net loss of 15.1 billion rupees for the first nine months of its fiscal year.

In February, SpiceJet’s auditor said the company’s liabilities exceeded its assets by 75.4 billion rupees as of Dec. 22.

The carrier reached a deal with lessor Carlyle Aviation Partners in February to restructure $100 million of its debt into a 7.5% equity stake, and it aims to reach similar arrangements with other creditors.

SpiceJet stresses it is not going down the same path as Go First, issuing a release on May 11 stating categorically that “it has no plans whatsoever to file for insolvency.”

“We want to scotch any speculation that may have arisen due to the filing by another airline,” SpiceJet says. “The airline is firmly focused on its business and remains in active talks with investors to raise funds.”

Jet Airways is one carrier that could certainly sympathize with Go First’s situation. Jet found itself in a similar position in April 2019, when it had to suspend its operations and enter bankruptcy.

Jet’s lessors applied to deregister almost all of the carrier’s fleet and successfully reclaimed the aircraft. The airline has been grounded since then, with no firm relaunch date set.

Creditors selected the Jalan-Kalrock consortium to take over the carrier in October 2020, and a court approved the plan in June 2021.

However, plans to relaunch operations have been postponed multiple times. There have been disputes with the creditors over the terms of the takeover agreement and debt payment commitments.

A further setback for Jet occurred when CEO-designate Sanjiv Kapoor left the airline on May 1. Kapoor is an airline industry veteran who was appointed in April 2022 to lead the carrier’s revival. A new CEO will be announced soon, the consortium says.

On Jan. 13, the NCLT ordered that ownership of Jet Airways be transferred from the creditors to Jalan-Kalrock, and the court set a deadline for the new owners to make agreed payments to the creditors.

This deadline expired in mid-May, although the carrier has applied for an extension, India’s Financial Express reports. An AOC granted to Jet Airways in 2022 is due to expire in May.

In its statement regarding Kapoor’s departure, Jalan-Kalrock said the airline’s relaunch has taken longer than originally estimated. However, the consortium also stressed that it remains committed to paying the creditors and reviving the airline.