Defunct airline Jet Airways under new management may take to skies next year, more than two years after it got grounded.
The full-service airline ceased operations in April 2019, crippled by mounting losses and ballooning debt. That led to thousands of job losses. The airline founder, Naresh Goyal, had resigned as chairman in March 2019 and Jet Airways underwent proceedings under the Insolvency and Bankruptcy Code.
Under its new management comprising Murari Lal Jalan, a UAE-based Indian-origin businessman, and London’s Kalrock Capital, Jet Airways is in the process of revalidating its existing air operator certificate. The airline is expected to begin Delhi-Mumbai flights in the first quarter of the next fiscal and overseas flights by the second half of next year.
The airline plans to have over 50 aircraft in three years and 100-plus in five years. Jalan feels that Jet Airways still commands brand loyalty and hopes to capitalize on it. The airline was once a leading private carrier and later lost its leadership position in the domestic circuit to low-cost carrier IndiGo. However, it had commanded a leading 12% share of the international market.
The Jalan Kalrock Consortium is working closely with aviation authorities for slot allocation, airport infrastructure, and night parking. In its new incarnation, Jet Airways will be headquartered in Gurugram near New Delhi, though it will continue to have a strong presence in Mumbai – its previous headquarters.
The consortium got its approval from the National Company Law Tribunal in June this year. Earlier in October 2020, it had won the bid for Jet Airways after the airline’s Committee of Creditors voted in its favor.
Hurdles remain
However, as part of the settlement, the banks were to take a massive haircut of about 95%. They had jointly made a claim of 78 billion rupees, but only 3.85 billion rupees were earmarked for them. State-owned lender Punjab National Bank has approached the National Company Law Appellate Tribunal seeking to quash the rescue plan. This could prove to be a hurdle for Jalan-Karlock’s attempt to revive the airline.
In addition, the airline’s erstwhile employees have filed an appeal in the appellate tribunal alleging a raw deal. After the grounding of the airline, several hundred employees xwwere owed arrears ranging between 300,000 rupees and 8.5 million rupees, depending on their designations and years of service – but under the new settlement an employee may get only 23,000 rupees.
Bleak outlook
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.
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.