The ‘Joy to Flying’ is Back

The post was updated when it was reported on October 17 that the Kalrock Capital-Murari Jalan duo
had won the bid for Jet Airways. It was first published in April 2020. Because Jet Airways used Boeing
jets, Hussain, like hundreds of his colleagues who joined the relatively inexpensive airline that
operates Airbus planes, must undergo retraining before flying. What makes employees, industry
executives, and customers nostalgic for an airline that came close to collapsing?

Not Flashy But Classy

Jet Airways commenced operations in 1993, as Damania Airways and ModiLuft began service.
However, customers had been travelling with East-West Airlines for over a year. Jet Airways,
managed by Naresh Goyal, concentrated on service and operations while Damania Airlines made
headlines for offering beer for breakfast. Customers flocked to the airline in droves.

“The personal attention they gave both in flight and on the ground is what one recognizes. It was
well ahead of every other airline when it was at its peak”, Prasad, a member of its Jet Privilege
reward club, said.

According to Goyal, a former travel agent turned airline entrepreneur, Jet Airways was modelled
after Singapore Airlines and Lufthansa, two renowned airlines for their service. Goyal’s primary goal
was to gain corporate clientele. Jet Airways quickly became a favourite among travellers seeking
nonstop flights to overseas destinations despite competition from Air India. He courted the wealthy
and famous, and he adored being in the company of Bollywood celebrities.

And his staff, particularly the pilots, adored him as Goyal developed a class structure in Jet Airways, a
system where pilots were gods. Who else sends pilots to New Zealand for training on a paid
vacation? As a result, pilots at Jet Airways were among the highest-paid in the industry.

How Did The Love Story Turn Sour?
Wrong Calls
Goyal was a master of circumstances, manipulating even the most hostile conditions. For example,
he was once a vocal opponent of FDI in aviation before abruptly changing his mind and securing the
first foreign investment for an Indian airline. Even the master misunderstood a changing market,
especially when two competitors were involved.

The first was in India, directly under his nose. IndiGo was the name of the low-cost carrier leader.
One example exemplifies Goyal’s and the rest of Jet Airways’ senior management’s blindness to the
threat posed by the Rahul Bhatia and Rakesh Gangwal-led airline.

A team of aviation consultants presented to Jet Airways’ senior management in 2006, about a year
after IndiGo began flying. The advisors cautioned their hosts that “business as usual” is not an
option. Some of the current carriers “will leave,” pointing to IndiGo’s 100-aircraft purchase,
unprecedented for a newcomer.

Simultaneously, Goyal was apprehensive of Vijay Mallya, who had launched Kingfisher Airlines as a
full-service carrier, putting Jet Airways in direct competition. According to industry sources, Goyal
was concerned about Mallya’s airline’s rapidly expanding popularity.

To keep Kingfisher at bay, Goyal purchased Air Sahara. However, this costly acquisition only
contributed to Jet Airways’ debt load, which eventually ran out of money to pay the interest
payments.

The Middle-East carriers were the second source of concern for Goyal. Goyal miscalculated the
impact they would have on Jet’s European traffic. But, according to a senior industry executive, he
couldn’t defeat them, so he decided to join them. While Etihad Airways’ FDI was hailed as a stroke of
genius, industry experts have questioned if Jet Airways benefited from the deal.

“Jet flights, Etihad insisted, would now halt in Abu Dhabi, the former’s hub. Goyal attempted to
address this by establishing a hub in Brussels, but this was ineffective because the Belgian capital did
not receive enough local traffic from India. A hub, such as Dubai or Frankfurt, must have sufficient
local traffic. “According to the above-mentioned senior executive, When Goyal moved the European
hub to Amsterdam, it was arguably too late. Jet Airways lost ground in its home market to the fast-
emerging low-cost carriers led by IndiGo due to these moves.

The situation worsened in 2018, with rising fuel prices and a weak rupee putting strain on the
airline’s finances. It didn’t have enough money by December to meet its debt repayment obligations,
never alone pay the salaries of its once-feted pilots. Banks owe the company around Rs 8,000 crore.

The End Game

Both Jet Airways bankers and staff hoped that Goyal would bring in much-needed capital in the first
few months of 2019. Goyal had made the most of his opportunities and found ways to weather the
storms. He could do it again in a heartbeat. He might get Etihad to bring in more money or perhaps
put his own money in.

According to a former Jet Airways employee, some kept working even after April 17. However, even
hopeful staff like Singh began to leave by the end of May, and by June, the banks, led by the State
Bank of India, had taken the airline to the National Company Law Tribunal. In another two months,
the Enforcement Directorate raided Goyal’s home and workplace, resulting in his arrest. The ED is
still looking into Goyal’s business dealings and suspicions of money laundering. Even while the
entrepreneur’s inquiries continue, the insolvency process appears to have halted, with several
extensions failing to attract a bidder. The insolvency procedure may have been extended for another
90 days, but the aviation sector’s severe collapse following the COVID-19 outbreak has dashed most
remaining hopes.

As of now, Jet Airways is expected to restart operations in the first quarter of 2022. This will be the
first airline to relaunch after a two-year hiatus. According to a press statement, Jet, India’s oldest
surviving private carrier, will begin operations in January or March 2022. According to the country’s
aviation regulator, the airline’s owners, the Jalan Kalrock Consortium (JKC), had hoped to begin
operations in the summer of 2021, with a schedule that starts on the final Sunday of March.

Jet Airways’ new owners have postponed the start of its operations for the fourth time in a year,
despite the airline’s continued legal fights with lenders and staff. Airlines could only operate 33 per
cent of their pre-COVID domestic services when India restarted scheduled domestic flights on May
15 last year following a two-month ban. However, this limit has been continuously increased, and it
now stands at 72.5 per cent.

India’s bankruptcy court accepted the Jalan-Kalrock consortium’s resolution plan for Jet in June, and
the airline is expected to restart domestic operations in the first quarter of 2022. Under the insolvency resolution procedure, the Murarilal Jalan-Kalrock Capital partnership bought the grounded airline. The current talks are part of the grounded airline’s rehabilitation strategy, whic the National Company Law Tribunal (NCLT) Mumbai bench approved in a regulatory filing on Friday.

Key Takeaway

The entire procedure was redone a little over a month after posting the report, and new EoIs were
called. Jet Airways has a long list of potential buyers. Krock Capital, one of them, has won the
proposal to relaunch the airline.