At one point of time Jet Airways had 123 planes but when it shut operations it had only five planes
The Tweets and re-Tweets put out by the Jalan Kalrock Consortium will hopefully see Jet Airways back on the Indian domestic aviation scene. Indeed, in these difficult times, the restart of operations by Jet Airways comes as a welcome and refreshing move. The carrier had plans to start flying this summer but that might be delayed by a few months.
Ever since the Naresh Goyal founded carrier stopped operations on April 17, 2019 – in fact, it was one of the oldest and biggest private carriers in the country – due to its whopping debt of $1.2bn and also because as it had then pointed out in a statement that “prolonged and sustained efforts with lenders and authorities did not yield the desired results”. At one point of time Jet Airways had 123 planes but when it shut operations it had only five planes.
At that time, the government asked the government-run banks to help Jet with a bailout plan for the airline and save the jobs of the 23,000-odd staff.
The bankruptcy case went to the National Company Law Tribunal (NCLT). While a number of investors bid for the airline, the bankruptcy resolution professional settled on the U.K.- based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan consortium. While reports indicate that the resolution professional under the Insolvency and Bankruptcy Code (IBC) arrangement has been able to put life back into the airline, the questions that is on everyone’s lips is: Will the move succeed?
Indeed, in these difficult times, the restart of operations by Jet Airways comes as a welcome and refreshing move. The carrier had plans to start flying this summer but that might be delayed by a few months
To begin with, Jet Airways in its present state is an asset that has no value. Reason: it does not have planes or personnel to run operations. Additionally, it has no slots. Why then did the creditors led by government-run State Bank of India (SBI) opt for Kalrock Capital – Murari Lal Jalan Consortium (headed by NRI Jalan) with as large as a 90 per cent haircut. The creditors/lenders were obviously led by the belief that they would lose all their money and be responsible for the employees and other lenders. That is why they chose to go with starting the carrier.
As it is the carrier has only a few planes and it cannot fly international since it does not conform to the criteria of 20 aircraft in its fleet when it begins operations. On its part, the consortium is keen to fund the carrier and has been talking with Boeing about the B737 MAX aircraft that Jet Airways had placed and their deliveries.
Even so, the problem will occur with slots. The airport slots that the carrier had have been taken over. Once the major player at Mumbai, Jet Airways has no slots at the airport. When Jet stopped operations, the slots were distributed on a temporary basis. But after all these years, no one knows whether Jet will be able to get the slots back. That is primarily because India’s civil aviation department does not have a slot policy. Actually, India never needed a policy since no “dead” airline has ever been revived. In fact, the consortium has held meetings with the Directorate General of Civil Aviation and the Ministry of Civil Aviation, but till the time of filing this report nothing has happened. It might be pointed out that Jet Airways along with its low-cost Jetlite, operated 110 daily domestic departures from Mumbai. It is slots like these that help carriers attract traffic.
Along with the slots, another question that is doing the rounds are the financial ability of the Kalrock Jalan group as well as its links. Any airline owner has to get a security clearance from the Ministry of Home Affairs (MHA). Murari Lal Jalan kept himself out of the limelight but today, he is confident of pulling through. Jalan is reported to have said that “Jet Airways is a renowned Indian aviation company with a strong legacy. The aviation sector underwent substantial correction on account of Covid-19 and created an opportune time to enter the sector. Our vision for Jet Airways is to operate the carrier as a full-service airline, both domestic and international.”
A report in Marketfeed said: “According to many in the business world, Murari Lal Jalan is a very mysterious man. There is not much information about how he was able to create all his wealth….The point to be noted here is that Jalan has no expertise in this particular sector. However, the management team of Kalrock (Manoj Madnani and John Oram have handled cargo and logistics while working for Polish billionaire Jan Kulczyk) does have the essential experience from cargo and logistics management through past deals.” The report goes on: “But now, a major doubt remains to be answered – how was Jalan able to create all this wealth and expand his business to such a large magnitude?… Moreover, the fact that most business people don’t know about him, makes everything all the more suspicious. All these facts make us feel very unsure and doubtful about his new deal with Jet Airways.”
Perhaps, what might be a big issue is what one of the country’s top weeklies, The Week, said: “The Jalan family also has close ties with the Gupta brothers (Ajay, Atul, Rajesh Gupta) of South Africa who are facing serious charges of corruption in that country.”
Will that be the next hurdle?
Aviation experts, however, believe that the Jet Airways revival plan will not take off. “I would subscribe to the view that it’s an aborted mission,” Jitender Bhargava, former Executive Director, Air India, was quoted saying. He gave his reasons to Forbes: “How can Jet (Airways) come back into the market? On the domestic front it is very difficult to even get a toehold considering IndiGo has close to 55 per cent market share. And if they are coming into the market to gradually overtake Air Asia India (about 5 per cent market share) and then SpiceJet (12 per cent), I would rate it as very difficult and (nearly) impossible (task),” he said.
Only time will tell how the Jet Airways saga will play out. We’ll keep you posted.