Crisis at Jet Airways Ltd Worsens now
The departure comes as the Airline struggles to keep itself afloat, with rising debt levels and higher oil prices weighing on profits. Indian conglomerate Tata Sons Ltd said last week it is in preliminary talks with Jet, but has not made a proposal to buy a stake.
"I am no longer able to devote the time required to meet my obligations, as an independent director on the Board of Jet Airways and have accordingly decided to resign from the Board," Mathai said in a statement issued by the Airline.
HIGHLIGHTS
Jet Airways I Ltd Airways, once the brightest star in Indian Aviation, is today crippled by huge revenue losses and depleting market share. And is in dire need of a shot in the arm
Even as you read this, one of Indian Aviation’s biggest deals may be coming together.
The Tata Group may finally buy out the beleaguered Jet Airways I Ltd Airways which, for a third quarter in a row, posted huge losses (to the tune of Rs 1,297 crore) last week. Tata Sons ChAirman N Chandrasekaran is said to be keen on the acquisition, and has apparently set the ball rolling with a feasibility study. If it works out, the Tatas will become a majority player in the skies, with this third acquisition after Vistara and Air Asia.
In August, both Jet Airways I Ltd CEO Vinay Dube and CFO Amit Agarwal had brought up the macroeconomic factors in a conversation with investors. “Indian Aviation…has been passing through a tough phase. Fuel rates have gone up by more than 150 per cent from their lowest levels two and half years ago,” Dube had said. “In the last year, the rupee has also depreciated by about five per cent. Airlines have been unable to pass [on] this increased cost to consumers by increasing fares. The lag between the increase in fuel costs and fares must get corrected over time. The industry cannot sustain such low fares in the long run.”
The problem, however, runs deeper than a few quarters — and its roots lie almost in the beginning of Jet Airways I Ltd ’s life.
“Jet Airways I Ltd Airways would have been a vastly different product if they’d had a baptism by fire, which they didn’t,” says Aviation expert Jitender Bhargava. “They had a smooth beginning with no competition, other than from the government-run Airlines. They came in with a good product, no pilot or union strikes, good on-time performance and a hunger to expand. It was very easy for Jet Airways I Ltd , a private operator, to poach passengers,” says Bhargava. “In the foreign markets, Jet Airways I Ltd was only operating in the same sectors as Air India, so it was easy for it to wean away international travellers too.” Clearly, this near-domination of the market left Jet Airways I Ltd unprepared for competition at home.
So when Kingfisher came in with a superior — and initially — a low-cost product, Jet Airways I Ltd found itself outpaced. “Kingfisher hit them, big time, as did Air Deccan, by dropping their prices,” says Singh. “But Jet Airways I Ltd made no effort to restructure costs and reduce fares; they continued to believe that they had a better product that people would pay a premium for.”
According to Aviation veteran Sanjay Bahadur, even when Kingfisher shut down operations in 2012, Jet Airways I Ltd made no major attempts to fill the vacuum. “IndiGo saw the opportunity and reaped the rewards,” he says. According to DGCA data, IndiGo’s market share went from 27.7 per cent in 2014 to 43.2 in September, 2018, while Jet Airways I Ltd ’s slid from 19.9 per cent to 14.2 in the same period. Adds Singh: “As a full-service carrier, Jet Airways I Ltd was trying to compete in the domestic market with local low-cost carriers and then, as an international carrier it was competing against the national carriers of foreign hubs which, being state run, have lots of money.”
Its bid for international expansion also hurt Jet Airways I Ltd . Analysts say the company focused more on the international market than the domestic sector — and ended up providing a platform for a new carrier (IndiGo), which eventually became its biggest competitor. Between 2009 and 2012, the government was also generous with bilateral rights to foreign carriers, and their market share out of India increased significantly, further eroding Jet Airways I Ltd ’s.
Here is the list of India’s Airlines that collapsed
Vayudhoot/ East west/ Damania/ Modi Luft/ Sahara/ Elbee/ Raj Air/ Archana/ Gujarat Airways/ VIF/ UP Air/ UB Aviation/ Paramount/ Air Costa / Deccan Air / NEPC/ Air Asiatic etc etc.
Giant Airlines of the USA/ world: TWA / PANAM collapsed./ Eastern was taken over by some one. Air Inter was taken over by Air France while Ansett was taken over by Qantas.
International Airlines: Alitalia/ Sabena/ Swiss Air too collapsed. KLM is taken over by Air France. North West Airlines was taken over by Alaska.
If one collapses, some new springs.
Type writers collapsed/ Camera films collapsed/ Floppy disc collapsed/ Telegraph system collapsed/ ink pen collapsed/ postal service had collapsed ( due to mobile). Every thing collapses one day. New things emerge.
Jet Airways I Ltd Airways, once the brightest star in Indian Aviation, is today crippled by huge revenue losses and depleting market share. And is in dire need of a shot in the arm
Even as you read this, one of Indian Aviation’s biggest deals may be coming together.
The Tata Group may finally buy out the beleaguered Jet Airways I Ltd Airways which, for a third quarter in a row, posted huge losses (to the tune of Rs 1,297 crore) last week. Tata Sons ChAirman N Chandrasekaran is said to be keen on the acquisition, and has apparently set the ball rolling with a feasibility study. If it works out, the Tatas will become a majority player in the skies, with this third acquisition after Vistara and Air Asia.
Tata Group to provide as much help to Jet Airways I Ltd Airways Crisis as possible.
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