Dgca: Post Go First audit, DGCA raises 13 observations; airline scales down resumption plans

NEW DELHI: Go First has scaled down its proposed resumption of operations by almost 30% following observations raised by DGCA post its recent audit of the grounded since May 3, 2023, airline. The regulator found the airline does not have adequate pilots and other technical staff for the proposed scale of operations. While it wanted to fly to Leh and Thoise, the Vikram Dev Dutt-headed DGCA found that the airline does not have the required number of specially trained pilots for these high altitude airfields. Almost 13 observations were raised post the audit, ranging from ongoing court cases to funding, refunds and spares.
“Concurring” with the pilot shortage observation, Go First resolution professional (RP) Shailendra Ajmera on July 15 wrote to the regulator saying the airline now plans to “resume operations initially with 15 aircrafts with 114 daily flights to begin with and add flights as and when we are able to stabilise operations and able to add pilots… now plan to commence with five daily Leh flights and three weekly Thoise flights instead of eight daily Leh flights and three weekly Thoise (defence charter) flights. ”
Go had initially submitted a plan to resume operations with 26 aircraft — 22 to be used and four to be kept standby — to 22 airports and 78 routes with nearly 160 daily flights. “The network plan for initially operating 15 aircrafts and as the operations regularise, we would plan to add 4 aircrafts and then 3 aircrafts respectively,” the response says.
The RP has also told DGCA that the airline has to process refunds of over Rs 500 crore for flights cancelled till early July and has advance bookings of about Rs 110 crore. While the regulator asked how it plans to refund this money, there is no clarity on that yet as the same hinges on resumption of operations and aircraft getting a threshold occupancy. The RP has told DGCA that agents will be allowed to book tickets using their money blocked with the airline and passengers who booked directly will get refunds from fresh cash flow the airline gets from new bookings. All this may happen in 120-150 days once fresh bookings resume and after getting NCLT nod to do so.
The DGCA had conducted a special audit of Go facilities at Delhi and Mumbai from July 4-6 audit and then inspected its parked aircrafts at Bengaluru, Nagpur, Ahmedabad, Kochi and Kannur. Following this, a number of observations were sent to the RP. It sought an update on the supply of engines from Pratt & Whitney (PW) and also inquired about a court judgment that prohibits Go First from selling tickets (DGCA has barred Go from doing so).
The observations raised include: “(Some) components required for subsequent maintenance schedule in July and August not available. The contract with the vendors (covering 95% of supply chain) is valid, however, Go First is required to deposit advance funds for continued support.” Missing medical kits in some aircraft inspected at Delhi. And most importantly on how the airline will fund itself and pay salaries.
Ajmera has responded to these issues in his July 15 communication. Regarding funding, he has told the DGCA: “Based on our discussions with the committee of creditors (CoC), we have been informed that the approval for the interim funding is being discussed with their respective competent approving authorities of the Banks. We are in continuous dialogue with the CoC members and we endeavour to provide you with regular updates on the approvals.”
Regarding refunds, Ajmera’s response says: “…the total passenger cancellation basis announcement till July 10, 2023, are Rs 478.8 crore which were booked through travel agents and Rs 13.8 crores of bookings done directly through company website or mobile app. In addition, there are advance bookings of Rs 106.9 crore which were booked through travel agents and Rs 0.9 crores of booking were done directly through the company website and mobile app.”
“As per the business resumption plan, we have assumed, basis the initially discussion with few of the travel agents to operate on a cash and carry basis for initial two months and gradually start customer refunds. The proposed mechanism envisages a formula wherein the travel agents are allowed to book tickets using the existing wallet balances and parallelly start customer refunds on a weekly/monthly intervals on first in, first out (FIFO) basis. Considering the proposed mechanism, we estimate the refunds to be processed by travel agents after normal flight operations of 22 aircrafts and subject to achievement of the Passenger Load Factor (PLF) as per resumption pan within a period of around 120 to 150 days on first in first out (FIFO) basis.”
“For the refunds due for the passenger who booked their travel directly on the website of the company or through App, we estimate that the refunds will be processed from the fresh inflow expected from the payment gateway and will be processed between 120 to 150 days.… prior to processing of refunds, RP will approach NCLT to seek approval of customer refunds,” Ajmera says.
Regarding pilots and other staff, the DGCA obersvation says: “The available strength of pilots (P1) are not sufficient for the proposed scale of operations. P1 and P2 qualified for Leh are not sufficient for the planned operations for Leh. P2 qualified for Thoise are not sufficient for planned operations. The rostering staff, flight dispatchers, SEP instructors, CRM instructors.. performance engineers, technical instructors, are not sufficient for the proposed scale of operations.”