In a noteworthy development, the global aviation watchdog, Aviation Working Group (AWG), has downgraded India’s status from “positive” to “negative.” This downgrade comes in the wake of the ongoing insolvency struggles faced by Go First, prompting concerns over the broader implications for the country’s aviation industry.
Go First, which ceased operations on May 3, filed for insolvency in May 2023. The subsequent legal proceedings have resulted in a moratorium on the airline’s assets, preventing lessors from reclaiming more than 40 of the carrier’s 54 planes.
The AWG’s negative rating suggests potential repercussions for Indian carriers, as it is anticipated that lessors may respond by increasing aircraft leasing rates. This development follows AWG’s earlier downgrade of India’s compliance rating in September 2023, directly linked to the legal disputes between Go First and its lessors.
Despite a brief respite when India was upgraded to the “positive” category following a Ministry of Corporate Affairs notification exempting plane- and engine-related transactions from the Insolvency and Bankruptcy Code, the recent events have led to a renewed pessimism within the global aviation community.
In a parallel legal battle, the Delhi High Court has instructed the Resolution Professional overseeing Go First’s crisis to respond to allegations of non-compliance with court orders. The lessors accuse the Resolution Professional of hindering the inspection and maintenance of the grounded aircraft. The court has set a deadline of December 10 for the Resolution Professional to submit an affidavit, emphasising the necessity of meticulous adherence to court orders.
The Go First case is scheduled for the next hearing on December 12, where the court will assess the compliance status and further delve into the intricate challenges facing the embattled airline.