The second innings of Jet Airways, which crash-landed in 2019 following its bankruptcy, is big news for sure. India’s oldest private airline, which was touted as a highly successful model based on the likes of Emirates Airlines, soon became the favourite of all classes of flyers thanks to its comfort level and time management. 

Despite this, the business owned by Naresh Goyal crashed, and Jet Airways suspended operations in 2019, after its then promoters failed to provide liquidity and the insolvency resolution process started for the airline. Now the comeback story is making headlines.

The new avatar of the airlines is promoted by The Jalan-Kalrock Consortium, which completed the two proving flights, thus clearing the routes for the air operator certificate (AOC) by the aviation regulator, Directorate General of Civil Aviation (DGCA). Jalan-Kalrock is the consortium of UAE-based NRI Murari Lal Jalan and U.K.-based Kalrock Capital Management in London.

While the operator is all set to resume the operations, there are many nagging questions as to what led to its failure despite having an impressive performance and strong customer base.

When the flights were grounded after the Jet Airways operated its last flight on April 17, 2019, thousands of employees were rendered jobless. Some left the airline industry forever while a few others reincarnated as entrepreneurs. Apart from the employees, the vendors of the operator also suffered a lot, thus causing a huge tremour in the industry. While the operator is back, will those who left it come back? Yes, there are a few who are still hopeful of a second innings in the airlines that is also into the second innings.

Though there are many speculations doing the round as to what led to the crash, in his book, ‘The Custodian of Trust: A Banker’s Memoir’ Rajnish Kumar, former chairman of SBI, said that there were a few factors that led to the downfall. 

According to him, perhaps the beginning of the end of the airline started when its promoter Naresh Goyal along with an investment banker approached SBI for additional loans. Those days, SBI was leading the consortium of banks, which had lent nearly INR 2,000 crore to Jet which was to the tune of 25 percent of the total liabilities. In lieu of additional loans, they offered shares of JP Miles, a frequent flyer programme, run jointly by Jet and Etihad Airways to the lenders. However, the equity structure of JP Miles had something that did not go along the FDI rules in India those days. In JPMiles, Etihad Airways was the major stakeholder with 51.1 percent while Jet had 49.9 percent share. India’s FDI rules cap foreign investment in an Indian airline to 49 per cent if the investment is being done by a foreign airline.

According to the book, Etihad was looking at $800 million support from banks in return for shares of Jet Privilege. However, the FDI rules were a major stumbling block and caused SBI’s reluctance to lend more. “However financing against shares that were closely held with no secondary market for trading was not SBI’s cup of tea,” according to Kumar.

The Goyal problem

Meanwhile the cloud of mistrust between Naresh Goyal and Etihad grew thicker, it is said. Goyal did not want to give up his control. He was apprehensive about the intention of Etihad. He felt their real interest was limited to acquiring Jet Privilege and opening the programme to other airlines and thus making up the loss it had incurred on its investment in Jet Airways. “The team at SBI had also started veering around to the same view and in one of the meetings, when out of sheer frustration, Arijit Basu, then CMD of SBI, mentioned this to Tony (CEO of Etihad), he became aggressive and started moving towards Arijit menacingly. It was only my strong intervention that stopped Tony in his tracks,” says the book.

But, were there any other reasons? 

Everyone’s favourite airline 

No one has any clear answer. However, those days no one was hopeful of the revival of the debt-ridden airlines that had no assets. But the airline is back to business now, with great hope. Since it has a great tradition of service, it could come back stronger if they devise a new marketing strategy and management. This comeback is also historic, because Jet is the first-ever Indian carrier to be revived under the bankruptcy law. What is embarrassing was that it operated 600 domestic and 380 international routes with a reasonably good amount of fliers, and despite this its wings broke.

The ‘Joy of Flying’ was the tagline for Jet Airways in the earlier days. In the new campaign after the announcement of the return, they are focusing on the same with the tagline, ‘The joy is coming back’. With a professional approach and the knowledge regarding the changing sensibilities of the fliers, Jet can fly with colours for sure. Bon Voyage!!!