Jet Airways set to return to the skies

Financial troubles for Jet Airways began to increase during the decade and by 2018, mounting losses began to make things difficult for the airline

Issue: 3 / 2021By B.K. PandeyPhoto(s): By Boeing
Jet Airways 737 MAX

On April 17, 2019, the Indian airline industry went through a traumatic experience when one of its leading carriers, Jet Airways, was compelled to suspend operations on account of severe financial distress. Based in Mumbai, Jet Airways was incorporated as a limited liability company in April 1992. The following year, it commenced operations as an air taxi operator and thereafter on January 14, 1995, the airline was granted a scheduled airline status after which it graduated to full-fledged operations as an airline. However, its operations were limited to the domestic sector.

In 1996, Jet Airways placed an order for four Boeing 737-400 and six Boeing 737-800 aircraft from the original equipment manufacturer and these were delivered in the period 1997 to 2000. Jet Airways was the first airline in South East Asia to fly the Boeing 737-800. By April 2001, the number of airliners in its fleet had increased to 30 with which the airline was operating nearly 200 flights per day to 37 destinations within India.

In 2004, the airline expanded its operations covering the international sector as well. At the time when its operations had peaked, the airline was operating flights to 57 destinations including 37 within the country and 20 to destinations outside India which included major cities in 15 countries across Asia, Europe, North America and the Middle East. By the third quarter of 2010, Jet Airways had become the largest airline in India with a passenger market share of 22.6 per cent. The airlines had its headquarters as well as its major operating hub at Mumbai and had its secondary operating hubs at Delhi and Bengaluru.

Unfortunately, in 2008, Jet Airways had to shut down operations on certain international routes that included services to San Francisco and Shanghai, primarily on account of the global economic down turn that had an adverse effect on its finances. At the end of the year 2011, the airline tried to restore international flights on the Mumbai–Shanghai route; but did not succeed in its effort to do so. In 2012, the airline discontinued its flights to New York City and in the following year, flights to Milan, a metropolis in Northern Italy were also stopped.

The first time since its birth that Jet Airways had recorded losses was in the financial year 2001-2002. This was attributed to fall in demand on account of a slowdown in the economy and as it turned out, this was a temporary phenomenon. However, financial troubles for Jet Airways began to increase during the decade and by 2018, mounting losses began to make things difficult for the airline that once upon a time was on the top. By March 2019, financial problems afflicting the airlines had reached a stage where the airline was unable to pay the charges for aircraft that were on lease. As a result of this, around 25 percent of the fleet had to be grounded. The situation became so grave that the Chairman of the airline Naresh Goyal and his wife Anita Goyal had to resign from membership of the Board of Directors of the airline.

On April 17, 2019, the airline was left with no choice but to suspend all flight operations as the lenders rejected a request for loan of Rs four billion for emergency funding. An added problem was that in the first week of April 2019, the Indian Oil Corporation had discontinued supply of aviation turbine fuel to the airline as Jet Airways had not been able to clear outstanding financial dues. A major blow to the reputation of Jet Airways came when the International Air Transport Association suspended the membership of the airline in the association. The situation that the once high-flying airliner was in, left no option with the government but to put up the airline for sale.

In October last year, a consortium of investors that included Murari Lal Jalan, a businessman based in the United Arab Emirates and Kalrock Capital, an asset management firm based in the UK, both with no experience in operating or managing an airline, came forward and bought off Jet Airways. After a struggle lasting for several months by the Jalan-Kalrock Capital consortium that had taken over the non operational airline in October last year, the Bombay Bench of the National Companies’ Law Tribunal (NCLT), the bankruptcy court of the government, approved a revival plan submitted by the new owners. The NCLT has given 90 days to the Directorate General of Civil Aviation and the Ministry of Civil Aviation to allot slots to the airline. It is now fairly certain that Jet Airways will finally take to the skies again!