On November 7, 2024, a final decision was made on the fate of Jet Airways (JAI), once one of India's largest airlines. The country's Supreme Court ordered the liquidation of the airline, bringing an end to a history of failed restart attempts, financial turmoil and legal battles. This decision marks the end of a company that was considered one of Asia's leading aviation companies years ago, but ultimately collapsed due to mismanagement, financial difficulties and failed rescue plans.
Founded in 1993 by Naresh Goyal, Jet Airways quickly grew to become one of India's largest airlines. In the 2000s, the company was known for its international connections and high quality of service. However, after a rapid expansion and with increasing competition from low-cost carriers, the airline began to experience financial difficulties in the 2010s. These were exacerbated by rising operating costs, mainly due to high oil prices, and inadequate capitalization.
The final crisis came in 2019, when Jet Airways was forced to cease operations due to liquidity shortages. The aircraft fleet was grounded and thousands of employees lost their jobs. The reasons for the failure were many: high debts, the lack of a clear recovery plan and the pressure to compete with other major Indian and international airlines. As a result, the company filed for bankruptcy and a long legal battle over the future of Jet Airways began.
The Jalan Kalrock Consortium: The Last Hope?
In 2021, a glimmer of hope appeared for Jet Airways when the National Company Law Tribunal (NCLT) approved the Jalan Kalrock Consortium (JKC) as a potential buyer of the airline. The consortium, led by Indian entrepreneurs Murari Jalan and Florian Kalrock, attempted to revive the company by starting operations and negotiating a financial deal with creditors. The initial agreement required JKC to make a payment of Rs 3,5 billion (approximately USD 41,5 million) to the lending banks and Rs 2,26 billion (approximately USD 26,7 million) to the former employees of Jet Airways.
However, despite this agreement, there were repeated delays and payment defaults. The creditor banks, especially the State Bank of India, accused the consortium of not making the promised payments on time. The company fell far short of the agreed payment targets, which led to increasing frustration among the affected creditors and employees.
The Supreme Court: Liquidation as a last resort
The case took a dramatic turn when the lending banks appealed against a decision of the National Company Appellate Law Tribunal (NCLAT), which had previously decided to change the terms of the original resolution plan, which the banks claimed was an impermissible modification of the agreements. In its decision, the Supreme Court of India clarified that the NCLAT had no power to modify the terms of the plan. Given the long delays and non-fulfillment of payment terms, the court saw no other option but to order the liquidation of the airline.
The court's decision led to the appointment of a liquidator by the NCLT, India's specialised bankruptcy court, and the 2 billion rupees (approximately USD 23,7 million) already paid by JKC will be forfeited, representing another setback for those involved. The liquidation of Jet Airways is now finalised and the airline will not resume operations.
The loss for the Indian aviation industry
The decision to liquidate Jet Airways is a major blow to the Indian aviation industry. The airline was once one of the largest and most prominent carriers in the country and its demise has not only cost thousands of jobs but also shaken confidence in the Indian aviation industry. Experts fear that this case could lead to further loss of investment and confidence, especially if clear and enforceable measures cannot be put in place to rescue struggling airlines.
While the Indian aviation industry has experienced strong growth in recent years, challenges such as rising fuel prices, high operating costs and a saturated market have put pressure on the remaining major airlines. The failure of Jet Airways shows how difficult it can be for airlines in India to compete in an increasingly competitive environment.
future of Indian aviation
The case of Jet Airways also highlights the structural challenges facing the Indian aviation industry. With a growing middle class and increasing demand for air travel, India is expected to remain one of the largest aviation markets in the world. But to capitalize on these growth opportunities, companies need to capitalize better, operate more efficiently and stabilize their business models over the long term. Otherwise, other airlines could face similar difficulties to Jet Airways.
The liquidation of Jet Airways marks the end of an era for Indian aviation. For many observers, the question remains whether there will be another company in India in the future that is capable of taking over Jet Airways' legacy and competing internationally with the major global players.
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