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| Photo Credit: The Hindu
Budget airline Go First on Thursday extended flight cancellations until May 9 and informed the DGCA that it would not be taking any further bookings till May 15 on a day the National Company Law Tribunal (NCLT) reserved its judgment on the airline’s plea for insolvency proceedings and an interim moratorium on lessors re-possessing its planes.
The airline’s CEO, Kaushik Khona, who was present at the NCLT hearing in Delhi told The Hindu that the total refunds for tickets booked directly through the airline amounted to “₹30-40 lakh”, in addition to which there were refunds for tickets bought through travel agents and web portals. Sales through intermediaries typically account for a much larger chunk, and could even be more than twice the direct sales.
The airline told the court that in the past 30 days a total of 4,118 flights were cancelled, impacting 77,000 passengers. As of May 6, 19 lakh passengers were booked with Go First for travel dates in the future.
Go First has also informed the aviation regulator, the Directorate General of Civil Aviation, that the airline was working to issue refunds to passengers or reschedule flights for the period beyond May 15. The latter has ordered the airline to process refunds under DGCA’s regulations as per the laid down timelines.
Go First argued in the court for an interim moratorium to protect its aircraft from being repossessed by lessors, along with de-freezing of bank accounts. It also sought admission of its insolvency plea so that the airline could be run under an Insolvency Resolution Professional as a going concern with the remaining 26 aircraft in its fleet. This would allow the airline to operate on “cash and carry” and pay for fuel, and landing and parking charges to airports along with salaries to employees, the airline maintained.
Of the 54 aircraft in its fleet, a total of 28 are grounded due to delays on the part of Pratt and Whitney to provide serviceable engines, which the airline claims has resulted in losses upto ₹10,800 crores as a result of which it is no longer able to meet its financial obligations. Earlier, the airline had cancelled flights for three days from May 3 to May 5. The airline owes ₹11,463 crore to all its creditors, including a sum of ₹6,521 crore to banks as well as defaulting on payments of ₹2,660 crore to lessors. Lessors have already moved to repossess aircraft, given notice for withdrawal of more aircraft as well as withdrawn letters of credit issued by bank as guarantee.
Though Go First’s CEO said that online travel portals could process refunds through credit issued by it to them, booking portals maintain they need the airline to release hard cash instead of virtual credit. Booking portals make an advance payment to airlines to be able to sell a certain number of flight tickets, in lieu of which they are issued a virtual credit. When there are cancellations, the virtual credit is replenished to be used for future bookings, but the booking websites say they would like the airline to give liquid cash so that they can process refunds.