In our previous article, we saw how Jet rose to the throne in late 1990s and occupied it for a good part of the first decade of the twenty-first century. On April 17, 2019, however, Jet Airways finally ceased all operations. The problems had begun long ago, when back in 2006, Jet went on an aggressive international expansion plan – ordering 22 wide-body aircraft for delivery over about 18 months, depleting cash at a rapid pace. This was the same time when fuel prices sky rocketed, and when bad luck started chasing India’s most revered carrier!

The Plummet of Jet Airways

More problems began to arise when Jet bought a struggling domestic airline: Sahara Airways, in 2007, that had an ageing fleet and did not really fit in Jet’s corporate culture. It was during this very time that IndiGo Airlines had begun capturing Jet’s market share with cheap fares. To compete with the low-cost carriers like IndiGo, GoAir and SpiceJet, Jet lowered prices without reducing its expensive services. The fact that ‘low fare’ is not exactly ‘low-cost’ is something that Jet Airways learned the hard way. Things got so tough for Jet, that in 2013, the carrier was almost close to deplete its cash reserve completely, however, it managed to stay float after Abu Dhabi’s Etihad Airways bought a 24 percent stake in the company.

To complicate the issues further, Naresh Goyal’s penchant for control, which helped him build the airline in the late 1990s, proved to be been a stumbling block for potential investors. Tata Sons (the group that owns now Vistara and Air Asia India) was in talks with Jet for a deal, that never materialized; Etihad too, had also been reluctant to increase its stake in the carrier for similar reasons. To add to the adversity, rules by Indian Civil Aviation Authorities cap foreign airline investment in domestic carriers at 49 percent, which ensured that Jet remained with an Indian entity. This led to whole different set of problems as the it narrowed the list of potential investors.

India is not kind to aviation businesses. Nearly 50 percent of the cost of operations comprises of fuel costs and taxes. In a market as price sensitive and dynamic as India’s, they say you need to be wealthy, wise, lucky and a visionary to establish a successful aviation business; Jet had all of this in its DNA. What it did not have is all of it at the same time, and that was the major impediment!

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