Aviation Sector Failure In India
The aviation industry in India has seen
significant growth in recent years. However, despite the industry’s growth,
several aviation companies have failed to sustain themselves in the market.
Companies like Kingfisher Airlines, GoFirst, and SpiceJet have all faced
significant challenges in recent years, leading to their eventual failure. In
this essay, we will examine the reasons behind the failure of these aviation
companies in India.
One of the most prominent examples of aviation
company failure in India is the case of Kingfisher Airlines. Launched in 2005,
Kingfisher was one of India’s largest airlines and was founded by the
flamboyant liquor tycoon, Vijay Mallya. The airline quickly gained popularity,
thanks to its luxurious offerings and high-end services. However, things began
to unravel for Kingfisher in 2011 when the airline’s financial woes started
surfacing. The company was unable to pay its creditors and suppliers, leading
to cancellations of flights and a significant loss of business. The airline was
eventually grounded in 2012, and Mallya fled the country to avoid prosecution
for financial fraud and money laundering.
The failure of Kingfisher Airlines can be
attributed to several factors. One of the primary reasons was the airline’s
overambitious expansion plan, which saw it acquire several smaller airlines and
routes, ultimately leading to an unsustainable debt load. Additionally,
Kingfisher’s high-end offerings were not enough to justify the high ticket
prices, and the company was unable to compete with low-cost carriers in the
Indian market. Furthermore, the airline’s management was accused of siphoning
off funds for personal gain, leading to further financial instability.
Another aviation company that has struggled in
the Indian market is GoFirst, formerly known as GoAir. The low-cost carrier has
been in operation since 2005, and despite initially performing well, the
airline has faced significant challenges in recent years. GoFirst’s financial
woes began in 2019 when it delayed paying salaries to its employees, leading to
a strike. The airline’s debt load continued to increase, and it was eventually
forced to sell a stake in the company to raise funds.
GoFirst’s challenges can be attributed to several
factors, including intense competition from other low-cost carriers in the
market, high operating costs, and a lack of differentiation in terms of
services offered. Additionally, the airline’s decision to focus solely on
domestic routes limited its growth potential, leading to revenue stagnation.
Finally, SpiceJet is another example of an Indian
aviation company that has struggled to stay afloat. The airline was launched in
2005 and initially performed well, thanks to its low-cost model and innovative
offerings. However, SpiceJet’s fortunes took a turn for the worse in 2014 when
it faced severe financial difficulties. The company was unable to pay its
creditors and suppliers, leading to the grounding of its fleet. The airline was
eventually bailed out by a group of investors, but it has continued to face
SpiceJet’s failure can be attributed to several
factors, including intense competition from other low-cost carriers, a lack of
differentiation in terms of services offered, and poor financial management.
Additionally, the airline’s decision to expand too quickly and acquire new
planes added to its debt load, ultimately leading to its financial collapse.
In conclusion, the aviation industry in India has
seen significant growth in recent years, but several companies have struggled
to stay afloat. Kingfisher Airlines, GoFirst, and SpiceJet are just a few
examples of companies that have faced significant challenges and eventually
failed. The reasons behind their failures can be attributed to a variety of
factors, including overambitious expansion plans, intense competition, and poor
financial management. To succeed in the Indian aviation market, companies must
learn from the mistakes of their predecessors and focus on sustainable growth
Will SpiceJet shut down like GoFirst
Today, not only the upper class in India, every class is coming and going by flight..those who are coming by railway have adopted airplane mode…My airports are being built in Tier 2, Tier 3 cities and Boeing According to this, India will be the fastest growing aviation market in the coming 20 years… Now with this information, anyone would think that wow, the aviation sector is very promising and according to this, the business of Indian airlines is also very good. Must be going on – where the airlines would be earning a lot and paying the employees too…
But the reality is exactly the opposite, in fact, the business of India My Airlines is very soft… and this is such an industry, where even a good conglomerate invests money, it fails. Now to Vijay Mallya’s Kingfisher Airlines Just take a look…According to the data, there have been some 13 airline bands in the last 20 years including big ones like JetAirways, and Kingfisher Airlines, and small ones like Air Carnival, and Air Pegasus… Yes, India, no one for the airline company No less than Kabir…
And now where GoFirst was about to file an IPO last year, the company is now calling us, Tata-bye, and has filed for bankruptcy. GoFirst executives say the airline’s financial woes in Gujar Rahi are because US-based jet engine manufacturer Pratt & Whitney (P&W) is unable to supply them with engines that have grounded more than 50 aircraft.
SpiceJet’s Turbulence and Problems are being paid for every quarter. Yes, now GoFirst has been cut off from the sky, with the notice of NCLT (National Company Law Tribunal), the condition of SpiceJet is also looking serious. is is…
So will SpiceJet shut down like GoFirst?”
On 28th April Ireland’s Air Castle (aircraft lessor) filed a petition (bankruptcy application) against SpiceJet in NCLT.Reason? Non-payment of dues. Now based on the ISS petition NCLT has sent notice to e SpiceJet matter will be discussed on 17th May…This is not the first incident Credit Suisse also approached Supreme Court on 21st April It is alleged that SpiceJet will fail to make the payment that was due to them for the settlement…
SpiceJet has said that there is no Aircastle aircraft in SpiceJet’s fleet, so there will be no hindrance in the operation, but if you go to the NCLT website, there are also 2 petitions against SpiceJet – 1 Lease by Willis Finance Corporation (Filed on April 12 and 2.) By Acres Buildwell Pvt Ltd (Filed on February 4)……
Apart from this, if SpiceJet is seen, it has been in the news for the last 1 year due to very wrong reasons… even a good penalty has been received once or twice… by the way, this happens in the aviation sector, but now When this news is coming soon after the bankruptcy filing of GoFirst, it looks like SpiceJet may also become a part of this jinx, and JetAirways may be shut down like Kingfisher Alliance…
So will SpiceJet come out of trouble?
According to SpiceJet’s official, the normal settlement process is going on and this notice is a part of that. Yes..so indirectly SpiceJet tells that whatever it is doing is under control and things are going on with the normal procedure. Now SpiceJet’s Q4 result is not out but if the Q3 result is seen then the result is quite promising. Yes – Net profit more than doubled in one year (from 42 crores to 110 crores). The cargo arm of the company has also made a good profit… So it can be said that SpiceJet’s condition may not be like GoFirst, and like Air India some way out
Now you must be thinking that why aviation companies are not able to make a profit in India?
● Well, low-cost market, high-cost-of-operation!
● low yield
● Lease cost and sliding rupee
● And funding is challenging, especially since the demise of Kingfisher Airlines and Jet Airways
Yes, the condition of the airlines of India has been very critical and still, there is a lot of Nawaz going on, don’t know who will slip when… That’s why such a structure must be made where the ecosystem can avoid pain and the customers Along with this, the business of airlines and the payment cycle of their employees continued… After all, how much loss is caused by a company being a band of business, and here the entire airlines are on paper to be closed….
Note: If you are an investor, and have your money in aviation sector stocks, monitor them very carefully and follow the situation…but if you are confused, take expert advice…