Jet Airways Revival Hope Diminishes

Jet's air operator certificate will lapse on May 19.

The Jalan-Kalrock Consortium has said it is committed to restart Jet Airways and is looking for a new chief executive officer to replace Sanjiv Kapoor whose term ended on Friday, April 28, 2023.

Revival, however, will not be easy even if the consortium quickly secures control of the grounded airline, feel industry experts.

This is due to changed market conditions and consolidation in the domestic market.

"Jet Airways has lost an opportunity to re-establish itself. There was space in the market for a second full-service airline after Air India. Go First is facing engine issues and SpiceJet has financial challenges and these factors have constrained their expansion. Jet could have taken the advantage but has failed to get off the ground," said aviation consultant Vishok Mansingh.

Akasa Air, which started operations last August, has cornered 3 per cent market share while Air India is consolidating its operations, Mansingh pointed out.

Getting desired airport slots and the right manpower will be a challenge for Jet now, he added.

An aviation expert concurred. "A lot has changed in the past six-nine months in terms of availability of aircraft, airport slots and pilots. The situation was different last May when Jet's air operator certificate was revalidated," he said.

For instance, new aircraft originally built for Russian airlines were widely available in the market for lease at that time rather than now due to the US and European sanctions, he said.

The Boeing 737 Max aircraft was banned in China but now carriers there have started operations with the aircraft.

The Jalan-Kalrock Consortium had signed letters of intent with lessors for a few such Airbus planes built for Russian airlines, but with its own launch delayed the planes have been snapped up by others.

In fact, the Jalan-Kalrock Consortium had planned to have six planes by December 2022 and double the number over the next six months.

"Everything was in place. In-flight menus were designed. An app was ready and an agreement was signed with a call centre," a source said.

Hopes for a quick revival thinned as lenders and the consortium differed on the issue of control and fulfilment of conditions' precedent.

Last November, the consortium was forced to put employees on leave without pay.

Many of them have now quit due to question marks over revival.

Kapoor, who was the chief executive officer designate, left after completion of his notice period.

Vice-president (operations) P P Singh and company secretary Neeraj Manchanda quit in the same week.

Jet is now without heads of operations, safety and training.

These are among the posts mandated by the Directorate General of Civil Aviation for all airlines to keep their operator certificate valid.

Jet's air operator certificate will lapse on May 19.

There are other challenges, too.

While allowing JKC to take control, the National Company Law Tribunal gave it 180 days from November 16 to make payments to its creditors.

This deadline, too, is fast approaching and the Jalan-Kalrock Consortium is expected to seek additional time for compliance in view of lenders' appeal against the NCLT order.

According to the original resolution plan, JKC has to pay Rs 185 crore (Rs 1.85 billion) to lenders in the 180-day period that ends next month.

The grounded airline's employees are also litigating for priority in payments due to them including provident fund and gratuity.

An application for liquidation of the company filed by the cabin crew union is also pending.

"Our focus is on the pursuit of justice. Payments to staff must be made on a priority," N Hariharan, legal advisor of the All India Jet Airways Officers and Staff Association, said.

"We are in the last leg of closing the transfer of ownership of Jet Airways to JKC, subsequent to which we will settle outstanding amounts payable to previous creditors according to our approved resolution plan," Ankit Jalan, board member of the Jalan-Kalrock Consortium, said, "and shall, soon thereafter, recommence the commercial operations of Jet Airways as per our relaunch plans."