Jet Airways in doldrums

After flying for the last 26 years the Indian airline, Jet Airways stopped operation in April 2019 as it failed to get emergency funding to keep its operation going on. The cash strapped airline was not able to service its debt which led lenders to take this harsh decision.

The airline did not just fail to service its debt, but it also failed to make payment to aircraft lessors due to which they ground the aircraft leased to Jet Airways. As most of Jet Airways’ aircraft were leased this had a significant impact on its fleet size and operations.

Further, we all know how price sensitive the Indian market is. There are a number of players who are fighting for a larger share of the Indian aviation industry due to this despite a rise in fuel prices Jet failed to increase ticket prices in a competitive market. Also, high state and central taxes on ATF and weakening of the Indian Rupee against the US dollar added to woes of Jet as the company had to pay a higher amount while importing ATF. Also, international flight operators like Jet Airways have to incur some dollar-denominated operating expenses which were challenging for the Jet in a weak rupee scenario.

Jet Airways’ decision to acquire Air Sahara in 2007 for cash proved to be a wrong decision which resulted into Jet’s entry into low-cost service from a full-service business model, but later in 2015, the company wrote-off its investment in the low-cost carrier.

In the last four consecutive quarters, the company has been posting net losses. The salary of Jet’s employees have not been paid for the last few months and indefinite uncertainty looms over 22,000 Jet employees. The other airlines such as Spice Jet and Air India is offering helping hands to the Jet’s employee by offering jobs. The Jet Airways had enjoyed around 15 per cent market share in the Indian airline industry, but since the company's operations started deteriorating other airlines are adding aircraft and making all necessary efforts to grab the market share of Jet Airways.

The lender consortium is looking for a potential acquirer for Jet Airways which includes name like Etihad Airways which already owned around 24 per cent stake in the airline. Going forward, we can only keep an eye on how things unfold and whether Jet becomes the second airline to go bust in the history of Indian aviation.