India’s grounded airline Jet Airways may finally take off as a resolution plan by its new owners has been given the green light. The airline was forced to shut down in April 2019 after its debt burden ballooned to more than US$1 billion.
The Mumbai bench of the National Company Law Tribunal approved a resolution plan put forth by Kalrock Capital and Murari Lal Jalan for Jet Airways with certain riders, according to media reports.
Last year, a consortium put together by UAE-based Indian-origin businessman Murari Lal Jalan and London’s Kalrock Capital won the bid to revive the airline. Both have no prior experience of running an airline.
According to the resolution plan, the successful bidder proposed a total cash flow of 13.75 billion rupees to revive the company. The plan was approved by the airline’s Committee of Creditors in October 2020.
The tribunal has asked the bidders to get the necessary approval from relevant authorities within 90 days. The new owners need to start the operation with 30 aircraft within six months of the plan’s approval by the tribunal.
The Resolution Professional, Ashish Chhawchharia, who has been managing this case since the insolvency proceedings began in June 2019, is hopeful of the airline’s revival. “If all goes well, we hope that by the end of this year, we can see some Jet Airways flights in the skies again.”
The airline will, however, have to solve the ticklish issue of slots at airports, which will be crucial for its revival.
The civil aviation ministry has argued that the slots are not the assets of any airline and they cannot be reclaimed as a right based on historicity. The tribunal said it was not giving a direction and the issue would be handled by the government. The resolution professional was hopeful: “Everyone will work towards that (resolution of the slot issue).”
When Jet Airways ceased operations on April 17, 2019, it had 115 aircraft on nearly 1,000 domestic and international routes. Founded on April 1, 1992, by Naresh Goyal, it remained in operation for nearly 25 years. Although Jet Airways lost its leadership position in the domestic circuit to low-cost carrier IndiGo, it commanded a leading 12% share of the international market.
India’s civil aviation industry is now going through a turbulent period as the two waves of the Covid-19 pandemic have led to travel restrictions and business travel has been badly hit. Several countries have imposed travel bans to India while some have issued travel advisories.
According to aviation consultancy firm Capa, Indian airlines are likely to register a consolidated loss of about $4.1 billion during the financial year 2022, similar to the losses clocked during 2021. It also sees a consolidation in the market with just two or three players and pre-Covid traffic may be restored only by 2024.