New Delhi: Indian airlines are in dire strait. A few years back Kingfisher airlines crashed down and now the turn of the second full-service airline of the country - Jet Airways. Even Air India, our national carrier is in trouble. It is surviving on tax payer’s money now.
What went wrong with Jet Airways that it had to go down the Kingfisher way is the question that troubles many who have been flying Jet Airways for the past 25 years. Especially, given the fact that India enjoys the stature of the world’s fastest-growing aviation market in the world, making it much worrisome.
Roughly it could be said that the company went on failing on various fronts in the past 10 years or so i.e. after acquiring Air Sahara. The company failed to address competition from domestic low-cost carriers, failed to evaluate the business model, failed to pay employees for months, failed to repay bank debt and even failed to pay lessors and it failed to pay attention to the warning signals it had received from time to time.
And, now even the lenders (who took the control of the company post the toppling of the majority shareholder chairman) failed to pump in emergency funds, as they had assured.
The code 9W is almost wiped off from the domestic and International skies. Jet Airways is almost on the death bed. While, it is believed by the experts that the promoters, after taking away the portion of their equity infusion, will live a long life.
Grounding of Jet Airways is a big blow to the Indian Aviation sector. The crash landing of this company was inevitable but it was dragging and dragging till the D-day announcement. After failing to secure additional fund to keep flying; the airlines on Wednesday, April 17, 2019, announced the suspension of all operations.
Jet Airways started its operations in the early 1990s and went to dominate the Indian aviation sector with a handsome market share. But fluctuations is a common characteristic of business and Indian aviation since the dawn of low-cost airlines like Air Deccan has become a hub of a cut-throat competitive world.
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To survive the competition Jet Airways also launched new low-cost services like Jet-Lite but could not sustain. The company always wanted more on its plate than it could digest and this brought the company to this level when they had to abruptly abandon all operations.
The decision to acquire Air Sahara could be termed as a wrong decision as that decision lacked vision and was filled up with vanity and insecurity. This wrong decision started showing off its colours in 2012 when Jet started facing the heat, the year when Kingfisher nose-dived acquired a place in the history books. During the same year, Jet was forced to implement cost-cutting measures.
Very next year to keep up with the market Jet airways partnered with Etihad; that gave a sigh of relief to some extent. The trouble, on the other hand, was certainly was not over instead it was brewing. The oil prices were on a record high and to maintain the market leadership Jet was forced to keep the fares low.
In the year 2005 Jet Airways was a lucrative stock in the markets. It was trading at Rs 1400 then and it has fallen down by over 80% since then. Since 2012 the company’s reserves have been in the red and except in 2016 and 2017 the company has been posting losses. During the 2016 and 2017 period the oil prices had fallen down and that was a great support to the company, but otherwise, we could say the company was not run properly as the operating profits show us a negative picture of the company.
Falling reserves, decreasing operating profits were the signs that the management would have taken note off. Similar things happen with businesses that have a larger than life promoter. Here the bigger lesson is the owner should know when to quit and hand over the controls to the professionals.
Jet Airways was a pioneer in bringing new standards in Indian aviation, it was flying high and offering ‘the joy of flying’ to its guests, but the eyes were not on the ground and hence it came down crashing.
