What brands can learn from Go First's downfall

Failure is often a more effective teacher than success as it forces us to analyse mistakes and learn from them to improve. Here's what brands can and should do to avoid a similar fate

Harsh Pamnani
Updated: May 5, 2023 01:27:04 PM UTC
Image: Shutterstock

Warren Buffet's quote, "It takes 20 years to build a reputation and five minutes to ruin it," is particularly relevant to the current situation of Go First airline with recent incidents that have severely impacted the airline's once-esteemed name.

The abrupt cancellation of all flights in May 2023 has caused significant inconvenience to thousands of customers, leading to widespread disappointment and frustration. The possible job losses have also added to employees' distress, leaving them uncertain about their future. The airline's bankruptcy filing further compounds the situation as Go First's assets fall short of covering its liabilities.

The incident comes at the peak of the holiday season, and has led to other airlines hiking fares, which may thwart bookings and travel.

The downfall of the airline has again raised questions about why big brands make blunders.

However, failure is often a more effective teacher than success, as it forces us to analyse mistakes and learn from them to improve. Therefore, examining the factors that may have contributed to Go First's downfall and what other brands can learn to avoid similar mistakes is important.

1) Weak procurement strategy

The foundation of a great brand lies in its exceptional products, and the backbone of such products is the use of high-quality ingredients or components. In the aviation industry, the engine is undoubtedly the most critical component of an airplane, and having multiple engine suppliers can offer significant advantages. Unfortunately, Go First's over-dependence on one supplier, Pratt & Whitney, proved a considerable challenge.

Persistent problems with Pratt & Whitney engines caused the percentage of Go First's grounded aircraft to increase from 7 percent in December 2019 to 31 percent in December 2020 and, alarmingly, to 50 percent in December 2022. The question that arises is why alternate arrangements were not made in time, considering the problem with the supplier has existed for years.

Surprisingly, the Directorate General of Civil Aviation (DGCA) had called for meetings with GoAir and IndiGo in August 2019 regarding recurring engine snags on Pratt & Whitney-powered engines. IndiGo managed to keep the issue under control by using two engine suppliers, Pratt & Whitney, and CFM International. But Go First didn’t.

To effectively manage risks, improve reliability, and maintain business continuity, brands need to implement a multi-vendor strategy. It not only diversifies a brand's supplier base but also fosters healthy competition between vendors, resulting in more favourable pricing and superior quality components, ultimately benefiting the brand and its customers. In cases where a brand is compelled to sign an exclusive contract with a vendor for any reason, it is crucial to have proper contingency planning in place, including termination clauses and alternative options to mitigate potential negative impacts on the brand's operations.

2) Poor planning and communication

When it comes to booking a flight, most customers are not concerned about the technicalities of the aircraft, such as whether the plane is from Airbus or Boeing or its engine is from Pratt & Whitney or CFM International. However, what matters to them is getting to their destination on time, at a reasonable price, and with the least hassle.

Effective communication is at the heart of brand reputation building. The issues faced by Go First appear to be happening due to delayed communication, both, internally within the company and externally with customers when they suddenly announced a suspension of operations.

Also Read- Go First has flown into heavy turbulence. Can it fly out of it now?

Why were ticket bookings still being taken if the financial situation was worrisome? If the decision was made to stop flights, why was communication abrupt, not only with customers but also with employees? Proper planning and communication could have reduced negative stories on social and traditional media.

Brands must prioritise effective communication between all departments. Additionally, they should keep customers timely informed rather than giving them sudden surprises. They should also exercise caution when selling products and avoid offering them if they anticipate any potential issues in the near future.

3) Broken brand promise

Undertaking a rebranding exercise involves a significant investment, including communication and engagement with the audience. In 2021, GoAir rebranded itself as Go First and underwent a strategic repositioning to establish itself as an ultra-low-cost carrier. The company's leaders promised to prioritise customers by providing attractive airfares, clean flights, and on-time performance.

However, the abrupt suspension of Go First flights has exposed the disparity between the brand's promises and the ground reality. The chaotic situation has caused significant disappointment among customers and dealt a severe blow to the brand's reputation. The airline's claims of providing quality service, low pricing, and putting the customers first have proven to be untenable and unsustainable.

To avoid such situations, brands must ensure their promises are realistic, achievable, and aligned with their capabilities.

4) Financial miscalculations

The company's low-price strategy, increasing debt pressure, and reduced sales due to grounded planes significantly impacted the airline's financial performance. Go First stated that it lost Rs 10,800 crore in revenue due to faulty engines and grounded planes. Additionally, having grounded aircraft that generate no revenue while incurring expenses, such as parking fees and lease payments, is a situation that no airline would want to face.

The airline is currently burdened with debts amounting to more than Rs 11,000 crore, owed to a range of creditors including banks, financial institutions, vendors, and aircraft lessors. All of them are concerned because the airline has stated in its bankruptcy filing that its assets are insufficient to meet its liabilities. This situation has also led to a fall in the shares of Go First's creditors.

To avoid such situations, brands must adopt a cautious approach to financial management and prioritise transparency and effective communication with lenders and investors.

Also Read- Air India has some serious ambitions for a turnaround in five years. Will its plan work?

Go First, once one of India's fastest-growing airlines had made a name for itself in the aviation industry through years of hard work and dedication. In 2019, it was recognised as India's most trusted brand by International Brand Consulting Corporation, US. While the airline may make a comeback, regaining customers' trust will require a significant effort and time. Will it be able to do it? Only time will tell, but it will take a lot of hard work to restore its position as a credible and reliable airline.

The writer is an author of 'Booming Brands' and co-author of 'Booming Digital Stars'. Views expressed are personal and don't necessarily represent any company's opinions.

The thoughts and opinions shared here are of the author.

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