With Jet Airways suffering serious financial trouble, is this the end of the road for the quarter-century old airline?

A few short months ago, Naresh Goyal, the Chairman of Jet Airways, was proudly celebrating the silver jubilee of the founding of his airline. Jet Airways had survived through thick and thin in that period. It was the only private airline in India that survived the free-for-all that started when Indian skies were finally liberalised. So many other entrants, notably East-West and Damania, had failed. When the second wave of private airlines started, Goyal saw off his biggest challenger till date, Vijay Mallya, who was brought down by a combination of his ego and crushing debts acquired in the haste to buy Air Deccan to add to the Kingfisher Airlines fleet. But Goyal had to battle off significant headwinds back then, and only an emergency cash infusion by the Abu Dhabi-based Etihad Airways, which bought a quarter of Jet Airways, saved the airline.

But now, Jet Airways finds itself in a financial bind again and like a train wreck, this has been a long time coming. Its financial troubles have mounted partially because of the reluctance of Indian banks, particularly public sector banks, to forward more loans often to meet basic working capital requirements. At the same time, the sheer obstinance of Goyal, who refuses to resign and lose control of his airline although that may be the only way to save it, is only making matters worse. Etihad Airways has always been spoken of as a white knight for Jet Airways but built as it is on the ego of Abu Dhabi’s rulers with oil money in an attempt to rival Dubai’s Emirates, is in a deep financial hole itself and has been ditching several other airlines it had invested in such as Germany’s Air Berlin and Italy’s Alitalia. And now Etihad, which came in with several provisos to invest in Jet Airways, is willing to wash its hands off the entire deal, leaving Jet Airways stuck at the altar but broke and Indian public sector banks with another non-performing headache. Should the government offer to bail out Jet Airways is the question on everyone’s lips. In a time of a jobs crisis, the loss of 27,000 jobs is not something that can be defended but the growing aviation sector means that many of the jobs lost will be absorbed by the market rather rapidly, which is what happened in the case of Kingfisher. That said, Jet Airways is a national asset. If it is allowed to fail, not only will over 100 aircraft leave the Indian register, thousands of Indians will find themselves stranded across the world. However, if Indian banks do decide to save Jet Airways, they should ideally take it down the bankruptcy route, effectively invalidating all the company’s shares and completely changing the management and putting the airline on a crash diet. Flights will still be cancelled and flyers will be stranded but if Jet Airways is to have a Golden Jubilee, this is the only way ahead. Goyal could have saved his airline if he was less obstinate, but if his airline is to be saved, he must go.