Just last year Jet Airways celebrated its 25th Anniversary. It pulled out all the stops in celebration, heralding the milestone with a swish commemorative logo, and revelled in the fulsome praise lavished on it from all quarters. Notable among all the compliments it basked in, besides the praise for its fleet, crew and service quality, was the hardiness with which it had survived for decades a variety of external body blows like draconian aviation fuel hikes, global currency fluctuations, industry challenges and fierce competition, both global and domestic, from worthy competitors. Naresh Goyal took a long, deep bow.
It certainly seemed obvious that Jet Airways, like other airlines, had made the most of the vaunted Indian aviation boom. An April 2018 report shows that the sector experienced 42 months of double-digit revenue per kilometer (RPK) growth and the load factor on all airlines were in the 90 per cent range. All the parameters showed a robust and growing aviation environment. Equally important, all the other Indian airlines also had reflected growth and income consonant with these numbers.
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This all came swiftly crashing to the ground in the beginning of 2019, with a growing degree of aircraft grounded due to non-payment of lease rentals, and then the final death knell: “suspension of operations”, which is virtually a terminal closure. The airline that billed itself as India’s oldest private airline and had dominated the Indian skies for two decades turned out to be a disastrous, hollow organisation, taking on things day by day on rapidly dwindling resources and frantically looking for an investor who would pump in money. Total closure was imminent and more than 22,000 Jet employees found their pay cheques had vanished. Scores of people employed by the many support services met with the same fate. Lessors pulled back their aircraft, leaving Jet Airways with a sad fleet of one Boeing 737 and five ATRs in the end. Rival airlines are quickly picking up the experienced and seasoned Jet pilots and engineers, the peerless cabin crew that were the pride of the airline. There are dismaying reports that they are being employed at half their Jet salaries.
The flood of financial irregularities coming to light was particularly shocking: Jet Airways was in debt in excess of Rs 8,500 crores to Indian banks, of which the largest exposure was of State Bank of India. The other Indian banks were Punjab National Bank, Yes Bank, IDBI, Canara Bank, ICICI Bank, Bank of India, Indian Overseas Bank and Syndicate Bank who also had loaned significant money to Jet. The questions began and snowballed into controversies as the facts emerging became more and more twisted. SBI and other banks were catastrophically exposed. Who had approved these series of loans down the years? Why had more and more good money been thrown after the bad debts for years? Had any promoter guarantees been taken or invoked? Why hadn’t forensic financial audits been conducted? If it was conducted what are the findings? What did the audit reports say ? What actions had been taken by the banks after the raids by the Income Tax department on Jet offices last year, which had apparently discovered gross financial management including falsifying and inflating expenses and siphoning off money?
Above all, what was the full extent of the loss? It is only the banks angle that is receiving publicity. What about the airline’s statutory dues, like Provident Fund, ESIC, TDS, Service Tax, GST, etc? What does Jet owe to Airports Authority of India, Indian oil and other fuel companies which are also government bodies?
This is not just a chilling replay of the Kingfisher Airlines debacle. It is also larger. Vijay Mallya had fled to London and was ensconced in some kind of financial immunity. However, here in India, Mallya’s houses, cars and assets were confiscated. Was this the latest chapter in the entire saga of people who siphoned off huge amounts and cheerily decamped abroad? What was being done to stem this horrific haemorrhaging of public money and is any attempt being made to stop Goyal from leaving India? Was there any plan to impound his array of assets? Will there be any attempt to quickly and publicly label this one man with all the labels that Mallya had been stuck with?
Even more chilling was the fact that the largest component of the financial exposure was to government-owned banks and organisations. Obviously, this was a large-scale mismanagement of money, not possible without the aid of individuals who had misused their power and responsibility to facilitate this heinous crime. The tentacles of this particular cancer spread into all levels of public office. Banks for all purposes must now supply explanations for a slew of inexplicable decisions made over years. Over Rs 8,500 crore were disbursed to the airline, and against what collateral? Then there is the bizarre SBI defiance in not declaring the airline an NPA, and insisting it is not an NPA till as late as March 25, 2019. What will happen if Jet is wound up — will the banks really recover any money? The very same set of banks that lost money when Kingfisher wound up will lose money in Jet. Should they have not been more careful after the Kingfisher disaster in 2012?
There is so much pontificating about selling the airline. The point is: What is left for a buyer to buy? An airline’s main assets are its aircraft, flying rights, slots, parking rights and its trained and experienced personnel. Parking rights and slots in Mumbai and Delhi, and in the cities abroad, are priceless assets. These have now been taken up by Indigo, SpiceJet, Vistara, GoAir and Air Asiain India. They are not fools to give them up easily.
One would be skirting black humour to say that Goyal should now buy Jet Airways back — though he astonished everyone last month by offering to do exactly that. The fact that he ventured to make this astonishing suggestion proves that this kind of money is sitting somewhere, and is available. But Jet Airways is dead, and he knows better than anyone that he would be buying a non-airline. No wonder he backed off his offer with the same speed that he made it.
I may claim a rather unique perspective to an understanding of the Jet Airways situation. I started Damania Airways in 1993, the same year Jet Airways began. But when I saw the writing on the aviation wall a little over two years later, I made an extremely painful decision: I handed the airline intact to new investors. At that point of time, the complications in Indian aviation were so suffocating because of government regulations and restrictions, no airline could survive without contorting itself into untenable positions. Above all, there was the danger of causing unbearable aggravation to passengers and staff. When the new owners took over Damania Airways, not one person lost their job, the share price was stable and stayed there, and, Damania Airways continued without pausing for a single day.
It is not easy to hand over any creation of yours. Personal anguish in such cases remains just that — deeply personal. But one person’s anguish, no matter who they may be, fades in comparison to the many thousands of people drawing a monthly salary from the airline, and their plight.
Each and every one trusted Jet Airways to practice and maintain superior management so that their personal lives are not held hostage — this is why they are all hard at work every single day. That is the crux of the matter.
The agonising plight of the Jet Airways staff, and the quandary they have now found themselves in, could have been avoided. In fact, just recently a finance company froze the savings of the Jet staff from their forex debit cards to recover the airline’s outstanding. This scramble to recover monies at the expense of innocent people is taking things to a new depth of cruelty. Every single day stories are emerging of passengers being subjected to harrowing experiences in the last days of the airline, and in one incredible case, a Jet Airways aircraft was confiscated by a European Cargo company after passengers had finished their security check, and just before boarding, in Amsterdam.
There is much in the national narrative about getting the airline to fly again. The dismaying truth is that it is impossible. The airline has been abandoned into the hands of people who just want their money back. Banks and other lenders now want their money, it doesn’t matter if the airline doesn’t fly: If they can shut it down completely and get even a part of their money back, they will do it in a trice.
Though Jet Airways is not coming back, what is worse, is how Mallya and Goyal have brought global shame to the Indian aviation industry by making Kingfisher and Jet Airways the laughing stock of the international aviation industry. The damage done will now take years to undo.
Indeed, the circus surrounding the deceased airline is now resembling the bizarre sight of a phalanx of medical personnel pretending to resuscitate a deceased patient at the graveyard. All the key management of the airline have resigned. The fleet has gone. Their slots and parking bays have been handed over to competitors. The employees have been abandoned. And the powers that be, including the SBI, are still brazenly prattling on about finding a buyer. The latest, supposedly interested party, operates out of an industrial gala in Chakala, Andheri, and is called East Darwin Platform holdings; another is a former air passenger service agent, besides some other small bidders. These are the kind of unsolicited bidders the banks are reaching out to now.
Jet Airways has, very unfortunately, crashed, Ladies and Gentlemen.
This article first appeared in the print edition on May 17, 2019 under the title ‘The crashing of Jet’. The writer is an aviation expert and founder of Damania Airways