Will Jet Airways Fly Again?

Will Jet Airways Fly Again?

  • Reading time:5 mins read

By Gobind Preet Singh

Under its founder Naresh Goyal, Jet airways had emerged as one of the best airlines in India. But mounting debts and huge losses forced the company to go into insolvency in June 2019. It had very little cash at that time and due to heavy competition their profit margins began to decline, as a result of these factors they teetered and tottered before finally seeing their fleet depleted. However now after 17 months a ray of hope has emerged for the airline, a panel of the airlines creditors have approved a potential revival plan. Now the question arises whether it will take to the skies again? While the approval of the revival plan is quite a significant development for the airline, the recommencing of operations would be a herculean task and quite uncertain. There would be many challenges ahead in reviving the airline which the new owners Karlock-Jalan would encounter before jet airways flies again. What are these challenges? Let’s find out The most difficult job ahead for the new owners will be to negate the impact of financial distress in the company which has further increased as a result of covid-19 and strict lockdown implications. This has severely hurt the global airline business with even some of the bigger names in the industry still struggling to generate adequate revenues. It is worth noting that revenues which the airlines generated have plunged nearly 80 per cent in the first six months of the lockdown period. Therefore it becomes apparent that if quite successful airline companies are facing such difficulties how big a problem it could be for an airline like jet airways to get back on its feet.

Another huge task for the owners will be to revive the name of the airlines. Jet airways have lost a lot in terms of positive name, recognition and other key intangible assets. A New jet airways would have to reassure travellers that they can trust jet with their travel plans. They would have to focus a lot on presenting something different to the public and offering something unique. Already, India’s aviation market is too crowded so just presenting itself in a regular manner may not work for the airline. Here, the problem is that jet airways do not really have anything to offer travellers that current airlines cannot provide.

When it grounded in April 2019, jet airways had a fleet of nearly 120 aircrafts and it had also placed orders to purchase around 225 Boeing 737 aircraft’s however now the expansion has reduced to just 12 aircrafts including Boeing 777, Boeing 737 and airbus A330 planes. The issue for the airline would be that these all are wide body planes mostly used in international routes but given the restrictions in international travel due to covid-19 pandemic, it would be highly unlikely that jet will be able to deploy these planes to work immediately leading to another massive problem.

A tough decision which the new owners would be challenged with is that whether jet airways should start with domestic or international operations? While the new owners Karlock-Jalan had initially proposed to start with international operations but the covid-19 pandemic completely thwarted their plans and they had to shift with the decision of starting flights domestically between metros and scale it up gradually to other sectors. Will the airline be successful starting with domestic operations is a Question. Further, the uncertainty of starting international services will remain high now with even Europe experiencing a second wave of covid-19 cases. Many foreign governments have banned Indian carriers for a limited period when passengers were found to be positive for the infection.

Another mammoth challenge that the new owners would face is with regards to the airline’s slots. Airlines need airport slots to land and take off. Jet airways lost all its slots to peers as government distributed it when it ended operations in 2019.As there is huge competition in the airline space it is highly unlikely that its peers will let go the slots. Intense lobbying will be needed to be done by the new owners. However the arrangement to give Jet’s landing slots and aircraft to rivals is temporary; the process to swap them again is complicated and is the domain of airports. It may get more difficult once rivals start new flights and sell tickets in advance, and that could potentially leave close to nothing for the new owners. The two new potential owners that is Karlock capital which is a financial services firm and Murari jalan both have not known t have operated an airline till now. So there will be difficulties for both of them to revive an airline from the scratch.

They will need a CEO who would be talented and capable to handle the airline and there are other critical positions relating to the top management which need to be filled. We are of the view that the current economic environment worsened by the pandemic is extremely challenging for a grounded airline like jet airways to fly again. Even if the revival plan gets approval from the National Company Law Tribunal (NCLT) Jet airways will have to go through many procedures and formalities before taking to the skies again. In order to start the first flight of jet airways 2.0 the new owners would have to undertake complex operations by bringing together all different parts of the puzzle which would require immense dedication and hard work.