International operations halted a week ago and domestic services shriveled in the interim; for the past couple days only a handful of ATR72-500s were flying. On the final day of service the carrier operated fewer than 40 flights.
Late last night we were informed by SBI, on behalf of the consortium of Indian lenders, that they are unable to consider our request for interim funding. Since no emergency funding from the lenders or any other source of funding was forthcoming, it would therefore not have been possible for us to pay for fuel or other critical services to keep the operations going.
Consequently, with immediate effect we are compelled to cancel all our domestic and international flights. This decision has been taken after painstaking evaluation of all alternatives and after receiving guidance and advice on the same from the Board of Directors of Jet Airways.
Over the last several weeks and months we have tried every means possible to seek funding, both interim as well as long term funding, to keep our operations going. Unfortunately, despite the very best of our efforts, we have been left with no other choice today.
After 25 years of sharing the Joy of Flying with Indian and International guests, Jet Airways and its Board of Directors have been forced to take this extreme measure, as prolonged and sustained efforts with lenders and authorities to ensure the sustainability of the airline did not yield the desired results.
There will, undoubtedly, be plenty of finger-pointing in the coming weeks and months as the collapse of the airline is examined from every angle. The Indian aviation market’s meteoric growth was implausible, supported by rock-bottom fares. The ever diminishing yields and rising domestic competition are one part of the problem. The growth of Emirates, Etihad and Qatar Airways in the Indian market, offering more options and cheaper fares into Europe yet another. Could the carrier have addressed these competitive pressures differently?
Should Founder and former Chairman Naresh Goyal have stepped aside earlier to ease the skepticism of lenders? Or would that have be insufficient given market conditions?
Did efforts to differentiate through increased on-board amenities undermine the operation, keeping costs high as margins evaporated?
Is there a larger, global economic malaise that must be considered with respect to the financial mess?
While plenty of answers exist it is unlikely any conclusive information will emerge for some time, if ever.
What does the future hold?
The State Bank of India continues its efforts to vet a new investor to back the airline. This would require a sizable cash stake and the likelihood of successfully resuscitating an airline of this size remains woefully low. Jet Airways’ main assets are:
- Its fleet, which is nearly entirely leased;
- Its slot portfolio, which is slowly eroding; and,
- Its international route authority from Indian regulators, which is not quite as rare as it once was.
Those are offset by a debt reported in excess of $1.2bn. Nonetheless, the carrier continues to believe an infusion of funds is viable:
But, tomorrow is another day and tomorrow provides us with new hope, new opportunity and new expectations. We know that India is better off with a flying Jet Airways, and so do our potential investors. …
We will now await the bid finalisation process by SBI and the consortium of Indian Lenders and will continue to support the bid process initiated by the lenders.
As a small consolation, members of the JetPrivilege loyalty scheme still have access to their accounts and can continue to redeem points, though obviously not for travel on Jet Airways. Partner offerings remain, however, as the program is owned by Etihad, not by Jet Airways directly. This is similar to how AirBerlin’s program remained slightly active after that carrier halted operations, though that was a short-term reprieve. It is unclear if the JetPrivilege program will fare better.
Beyond Jet’s collapse, questions also arise around the future of the Indian market in general. IATA previously predicted that it would be the number three aviation market in the world by 2025. That now seems rather unlikely. But Jet’s failure does not completely erase the market or even the growth trajectory. Indeed, for domestic operations it was a sizable but hardly dominant player. The upcoming IATA Annual General Meeting will almost certainly include discussions on this upset to prior forecasts.