Jet Airways was an Indian aspirational narrative of an effort literally taking to the high skies. But the dream ended on a sour note with experts pointing out a variety of reasons contributing to the free fall – the Air Sahara buy at a whopping $500 million in 2006, several flaws in the management like a single management team managing both the full service carrier and the budget airline, failure to assess the potential of budget carriers and unforeseen cost overruns. In its final stages, it had only 5 jets left in its fleet – down from a one time high of 123. Its debts stood at an unsustainable Rs 85 billion.
Jet Airways had refused to see the doom in the making. It went on operating as usual, spending `150 million a day even as its cost of operations (`4.49/km) became higher than its revenues (`4.21/km). In spite of these warnings, the management and the stakeholders, including the banks and the lease holders, wished away the impending catastrophe. Then, all of a sudden there was no cash – not even to buy fuel, to pay salaries or meet statutory obligations. Eventually, it ended operations with a last flight on 18 April.
Jet Airways can be said to be in good company. Some of its peers which stopped flying in 2019 include Germania of Germany, California Pacific of the US, Flybmi of the UK, Tajik Air and Asian Express Airline of Tajikistan, WOW of Iceland, Aerolíneas de Antioquía of Colombia, Fly Jamaica Airways of Jamaica and Air Philip of South Korea. There are memorable shutdowns of global carriers in the past too – like TWA of the US, Swissair of Switzerland, Alitalia of Italy, Air Berlin of Germany and Pan Am of the US.
Indian banks which have sunk money in Jet Airways are in a confused state of mind. Their actions post the closure are not based on sound reasoning. They are trying to sell an airline that does not have any aircraft, any market value, assets of any worth and little or no brand reckoning. If the banks had responded in good enough time, the airline could have continued in operation, repaid part of its debts and gained stakeholder confidence. Now, trying to sell this dormant entity is an effort in futility. Why would an investor bring in funds into a sick organization when he has the option to start afresh with that same investment?
This is one of the many instances of Indian banks erring in their judgment. This is also the repeated instance of megalomaniac founder-promoters prevailing over professional managers and pushing promising businesses into oblivion.
