Aviation Crisis: Jet Airways from bad to worse

Jet Airways has completed 26 years in the airline industry but now it is facing a major setback. It is evident that the aviation industry is crisis-prone worldwide. In India, the demand in this industry is growing faster than anywhere else as well as it is also facing a crisis as it is unable to serve the market efficiently due to multiple reasons. This time it is Jet airways which are facing a major downfall and has been weakened due to a combination of errors by both the private sector and, crucially, the government. Possible reasons for the airline’s downfall can be low-cost Indian competitors and ambition to expand its operations to international markets. Also, the lack of transparency in communication between airline management and government on funding. Also, banks are unable to make salary commitments. 

Jet was looking for investors. Etihad which is bleeding cash itself might have to step up. Nobody else found really interested, and definitely not unless they win a controlling stake; nobody was interested in buying Air India either when the government put it up for sale earlier last year. The Tata Group, which already runs one airline has reportedly been interested in both, but that’s because the group has had an obsession with airlines ever since Tata Airlines was nationalized.

As of November 2018, Jet Airways has been reported to have a negative financial outlook due to increasing losses. Therefore, cost-cutting measures, as well as talks with potential investors or buyers, have commenced. It suffered losses for three consecutive quarters now; its cumulative current liabilities have climbed to $2.2 billion. Reports said that it has a standalone net loss of Rs.587.77 Cr. for Q3.

 In March 2019 it was stated that about a fourth of Jet Airways’ aircraft were grounded due to unpaid lease rates. The lender’s consortium is expected to invoke their entire 51% stake in the airline to clear their dues. The other equity partner, Etihad, planned to decide to either rescue or severe ties with Jet Airways during its board meeting stated on 31 March.

On 5 April, Indian Oil Corporation stopped supplying fuel to the airline, citing non-payment of dues as the emergency funds have not been credited.

The employees of Jet have also indicated their intent to stop work if their dues for the past three months are not paid.[87] About 22000 employees are there in Jet. Airlines are struggling to pay its pilots and are not even able to pay its airport fees. Employees are also bearing the financial crisis with mounting salary dues.

On 10 April, an aircraft was seized at Amsterdam Airport by a European cargo-services provider over non-payment of dues. The loss of aircraft and arguments with lessors on the payment of the debts cab be the reason for the setback of the airlines.

On 12 April 2019, Jet Airways announced the suspension of all eastern-India-bound and all international flights due to a lack of available aircraft. As of 13 April 2019, the airline is operating less than ten planes, down in December 2018.  As of 17 April 2019, Jet Airways has suspended all flight operations, due to lenders rejecting Rs 400crores of emergency funding.

On 18 April 2019, Jet Airways’ last flight flew from Amritsar to Mumbai and its membership in the International Air Transport Association (IATA) was suspended.

Not only this, but there is also a cascading effect on others in the aviation business.

 

Ms. Jasmeet Kaur, 

Research Scholar, JIMS Rohini

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One thought on “Aviation Crisis: Jet Airways from bad to worse

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