Busy Bee Airways Appeals Go First Liquidation Decision
Busy Bee Airways Pvt Ltd, backed by EaseMyTrip co-founder Nishant Pitti and the unsuccessful bidder for Go First (Mumbai International), is contesting the January 20 ruling by the National Company Law Tribunal (NCLT) that permits the liquidation of the low-cost carrier. This legal challenge marks a significant development in the ongoing efforts to revive Go First, one of India’s prominent budget airlines.
According to CNBCTV 18, Busy Bee Airways’ legal representative, Apoorv Aggarwal, has argued before the National Company Law Appellate Tribunal (NCLAT) that his client should be granted the opportunity to submit a new resolution plan. Aggarwal emphasized that allowing the liquidation to proceed would diminish competition in the Indian aviation sector and negatively impact consumers by reducing available flight options and potentially increasing fares.
The appeal, formally titled Busy Bee Airways Pvt. Ltd. v. Dinkar T Venkatasubramanian, Liquidator, Go Airlines (India) Ltd. & Ors., was presented before the New Delhi bench of the NCLAT on January 23. Busy Bee Airways contends that the liquidation process undermines national interests by eliminating a key player in the low-cost airline market, which is crucial for maintaining competitive pricing and service quality for Indian travelers.
A central point in Busy Bee’s argument is the alleged failure of the appointed resolution professional, known locally as the administrator, to provide comprehensive data regarding Go First’s assets, liabilities, and overall financial health. Aggarwal claims that this lack of transparency hinders Busy Bee Airways’ ability to formulate a viable and effective resolution plan that could potentially save the airline from liquidation.
Nishant Pitti, co-founder of EaseMyTrip and a key figure behind Busy Bee Airways, was part of a consortium aiming to acquire Go First. The consortium included Ajay Singh, the managing director and majority owner of SpiceJet. Last year, during a sales campaign to salvage Go First, the consortium submitted a bid to purchase the airline. However, the bid fell short of expectations due to a court ruling that mandated the deregistration of Go First’s aircraft and their return to the original owners, effectively nullifying any chances of relaunching the airline under the proposed terms.
The Singh-Pitti consortium’s offer included an upfront cash payment of INR 5 billion (approximately USD 58 million) and a share in the proceeds from an impending lawsuit against Pratt & Whitney, contingent upon a successful outcome. Despite these efforts, the administrator and the committee of creditors deemed the bid insufficient, especially in light of the substantial claims amounting to approximately INR 120 billion (USD 1.39 billion) against Go First. Consequently, the decision was made that liquidation would likely yield better returns for out-of-pocket lenders and other creditors involved.
The NCLAT has adjourned the case until January 29, granting Busy Bee Airways permission to file an additional affidavit before the next hearing. This extension provides Busy Bee with the opportunity to strengthen its appeal and present a more compelling case for the revival of Go First.
The potential revival of Go First is of significant interest to the Indian aviation industry, which has faced intense competition and financial challenges in recent years. Reviving Go First would not only enhance competition but also offer consumers more affordable travel options, thereby fostering a more dynamic and resilient airline market in India.
Busy Bee Airways’ appeal underscores the broader challenges faced by low-cost carriers in India, where regulatory hurdles and financial constraints often impede the growth and sustainability of airlines. The outcome of this case will have far-reaching implications for the future of Go First and could set a precedent for how similar cases are handled in the future, potentially impacting the strategies of other airlines seeking to navigate financial distress.
As the hearing on January 29 approaches, stakeholders in the aviation sector are closely monitoring the developments. A favorable decision for Busy Bee Airways could pave the way for a renewed Go First, contributing to the diversification and strengthening of India’s airline industry. Conversely, if the liquidation proceeds, it would signify the end of Go First, reducing competition and potentially leading to higher fares and fewer choices for consumers.
Busy Bee Airways Pvt Ltd’s challenge against the NCLT’s liquidation ruling represents a critical juncture for Go First and the broader Indian aviation landscape. The resolution of this appeal will determine whether Go First can be revived as a competitive low-cost carrier, thereby influencing the dynamics of the airline industry in India and ensuring that consumers continue to benefit from a robust and competitive market.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com