 "DGCA issues notice to Go First, asks airline to stop selling tickets")
The Directorate General of Civil Aviation (DGCA) on Monday issued a show cause notice to Go First airline, asking why its licence—the Air Operator Certificate (AOC)—should not be cancelled as the carrier has scrapped hundreds of flights and initiated an insolvency resolution process.
The regulator also requested that the airline cease all ticket sales immediately. Go First, which commenced an insolvency resolution process on May 2, had already cancelled flights until May 12 and halted the sale of new tickets for flights scheduled between May 13 and May 22.
Prior to the DGCA's notice, the airline had been selling fresh tickets for flights set to depart from May 23 onwards. The DGCA stated, "In view of the sudden cancellation of flights and initiation of corporate insolvency resolution process under IBC (Insolvency and Bankruptcy Code) by Go First, the DGCA has issued a show cause notice to Go First under the relevant provisions of the Aircraft Rules, 1937, for their failure to continue the operation of the service in a safe, efficient, and reliable manner."
The airline has been asked to submit its reply within 15 days of the receipt of this notice, and further decisions on the continuation of its AOC will be taken based on its reply, it said. "Further, Go First has been directed to stop booking and selling tickets directly or indirectly, with immediate effect and until further orders," it added. Go First operated its first commercial flight in November 2005 after receiving its AOC from the DGCA earlier that year.
Almost half of the airline's 54 aircraft fleet is grounded due to a delay in engine supply by US-based Pratt & Whitney (PW). The airline, which has been making losses since 2018-19, squarely blamed PW for its cash crunch.
On May 4, the DGCA asked Go First to refund the passengers affected by ticket cancellations, as per the regulations. Go First had been operating about 200 flights per day before it started the insolvency process.
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Aviation consultancy firm CAPA India said on Twitter that India should urgently introduce mechanisms to institutionalize consumer protection, providing full refunds in the event of airline closure, along the lines of ATOL in the UK that is run by that country's Civil Aviation Authority (CAA). "CAPA India has been recommending this since 2011," it added.
Under the ATOL (Air Travel Organiser's Licence) scheme, any UK travel company that sells flights or holidays is required to hold an ATOL. If the company goes out of business, the ATOL scheme will provide refunds or repatriation to consumers who have booked a holiday or flight with that company.
Aircraft lessors on May 4 urged the DGCA to deregister Go First's 23 planes so that they can secure their assets before the insolvency process begins. There is a laid-down process under rules, and the regulator is required to de-register the aircraft from the registry within five working days of receiving the application.
Lessors have opposed Go First’s plea for a grant of an interim moratorium in the National Company Law Tribunal (NCLT). A moratorium ordered by the NCLT prohibits recovery of assets by owners and lessors. The NCLT has refused to grant Go First any such moratorium.