Jet Airways- Is it the end?

Jet Airways- the premier airline founded by Naresh Goyal in 1992, is in crisis today. The same airline which became the largest carrier by passenger market share in 2010, is on the verge of extinction today. On 17 April, Jet Airways flew its last flight 9W 2502 from Amritsar to Mumbai as its operations are suspended temporarily. How did this happen?  Well, there seem to be many reasons behind this catastrophic event but please note that the reason was not an immediate one. The seeds were already sown in the past which when combined together with a series of events which happened recently, triggered an inevitable downward spiral for the airline. Some of them are listed below:-

·     Rising fuel prices- The aviation industry uses Jet A and Jet A1-the most popular Aviation Turbine Fuel (ATF) types. The current rate is 58.06 per litre (Jan 2019). Don’t be surprised at this meagre amount and become complacent thinking that almost the same price exists for our automobiles as well. Take into consideration the distance travelled by plane on a single trip and the fact that a particular airline has a fleet of more than 50 airplanes operating. Thus the number automatically becomes enormous. For example- A Boeing-747 plane uses 36000 gallons or 150000 litres of fuel for a 10-hour flight. You are strong with Maths. Do the calculation!

·       Dollar-INR Mismatch- The decreasing value of Indian Rupee is not helping the cause either. The current rate is closer to 70. Eventually, when we are paying more amount for the same quantity of fuel (in terms of dollars), losses are bound to happen.

·        Merger and Acquisition- The 2007 deal with Air Sahara (later- Jet-Lite) worth $340 million was not fruit-full at all. When such a big aircraft dominated most of the industry, why was it showing interest in a comparatively low-cost airline? Apparently, Jet wanted to increase its market share. But the reality became far different and Jet suffered a lot eventually. Naresh Goyal was also not able to handle both airlines simultaneously. The purchase of Airbus A330 and Boeing 777 planes also turned out to be a mistake.

·       Competition with LCC- With the introduction of  Low Cost Carriers around 2004-05, huge rivalry and intense competition intensified in the market. Earlier, travelling in a plane was a luxury which only the elite class could afford. However, with the introduction of Indigo and Spice-Jet, things changed. Tickets became cheaper and the middle class could afford it as well. Thus, a warning bell was sent to full-service airlines.

·      Poor management- Most of us think, what exactly does mismanagement mean here? Well, it’s the inefficient handling of funds. Calling the pilots on a contractual basis when the plane itself is not ready, the unnecessary five-star hotel treatments to strangers coming for a meeting, too many unwanted perks given, all fall under this category.

Well, things are certainly looking grim for the airlines now. The airline is in desperate need for money but the Investors are not showing too much interest in the airline. Around 23000 employees worked for Jet and many have not been given their salaries. Nowhere to go, the employees are seeking intervention from the President as well as the Prime Minister.

Let’s see what the future holds for Jet!