Will Jet Airways rise like a phoenix from the ashes of its destruction?

Flyers from Delhi Airport’s Terminal 3 will notice Jet Airways missing from the listing on the flight information display screens. The scene is repeated at Mumbai Airport’s Terminal 2. With only around six aircraft operating, Jet Airways, which at one point of time a decade ago was India’s largest airline, is on the verge of a collapse. At the Delhi Airport, a line-up of several Jet Airways’ Boeing 737s sit forlornly, their engines and wheels covered in plastic sheeting and other vital parts protected by metal foil. The ultimate blow for the airline came when the leasing companies, which own those planes, said that they would transfer many of them to low-cost rival SpiceJet. In the times to come, many studies will be conducted to dissect what went wrong with Jet Airways. But for most, an ill-fated acquisition of Air Sahara, being a poison pill that took its time, is what ultimately doomed the airline. This was aided by a non-diverse board populated by friends of the promoter until the coup de grâce came from the low-cost expansion drive in India, which left the airline unable to maintain its bottomlines. Its limited international operations left it unable to cope with the onslaught from the Middle-Eastern carriers — Emirates, Etihad and Qatar Airways in India. Even though Jet found a white knight in the Abu Dhabi-based Etihad Airlines, the latter’s own issues have meant that it has not been able to fund the former adequately as the airline got badly hit by high fuel prices.

The question is what should the Government do over here? Should Jet Airways be saved because it is a national asset and several State-owned banks are owed hundreds of crores? Or should it be allowed to fail as a normal business would, stranding thousands of passengers and leaving thousands more unemployed? Frankly, the Government has its hands tied, it is damned if it attempts a rescue and damned if it doesn’t. Indian banks are trying hard to ensure that the airline can find a buyer, even if that buyer is Naresh Goyal himself, with the banks taking a massive haircut on their loans. However, ideally, the airline should find a new owner. Unlike Kingfisher, Jet Airways has a well-established brand value and a frequent flyer programme with millions of fairly loyal passengers, many of whom are willing the airline to succeed. But the airline business, as we are well aware, is a brutal one, and the Government should not step in to keep the airline running on taxpayer money, having one drain on taxpayer funds — Air India — as it is. Ironically, some experts feel that Jet’s demise might actually help surviving airlines in India to do better with more sustainable airfares and eventually more sustainable growth. The next Government that comes to power in June should, however, ensure that Indian carriers are allowed to spread their wings abroad, ply in new routes and not lose out to global competitors. This will be good for India, our airlines and passengers.