India’s Jet Airways on Thursday halted all its operations after it failed to secure interim funding for a bailout of the cash-strapped airline that once was the largest carrier by passenger market share in the country.
The announcement to cancel all its international and domestic flights, with its last flight operating on Wednesday, came weeks after the airline, weighed down by a financial burden of $1.2 billion, began its last-ditch effort to secure a rescue funding of $217 million from its lenders.
But the carrier failed, collapsed and decided to shut down, albeit temporarily, leaving its nearly 20,000 employees in limbo.
“Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going. Consequently, Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today,” the carrier said in a statement released on Wednesday evening.
This brought the curtains down on an airline that was among India’s first private carriers after the government opened the civil aviation sector in the early 1990s and ended the monopoly of state-owned airlines.
Jet Airways quickly soared high in the skies after it began its operations. During its peak in the last nearly 26 years of its existence, the airline flew more than 120 aircraft and operated over 600 daily domestic and international flights.
Known for its slogan “The Joy of Flying,” the carrier's gloomy end began last year as revenues dwindled amid uncontrollable fluctuations in global crude prices and a bitter price war among budget airlines in a country filled with price-conscious fliers.
The crisis for the carrier, which used to charge premium for its full-service offerings, worsened as the Indian rupee kept nosediving, touching a record low of nearly 75 rupees per United States dollar last year.
The weakening rupee caused a further hike in aviation turbine fuel costs, which has affected all Indian carriers.
While other cash-rich carriers flew through the turbulence, Jet Airways, which from 2010-12 remained India’s largest carrier by passenger market share but vexed by a group of low-cost competitors, was forced to fly by night.
The chaos is partially also blamed on “bad management” led by its founder Naresh Goyal, who stepped down last month as chairman of the company after showing significant losses in the past few years.
Its share of the domestic passenger market has also fallen to about 15.5 percent in 2018 from 22.5 percent four years ago.
Captain Asim Valiani, the vice president of the National Aviators Guild, an association of over 1,000 Jet Airways pilots, told EFE that some 20,000 employees of the carrier have been let down not only by its promoters but also by the government.
“Yes, some blame has to go to the management also. But they are not entirely responsible,” Valiani said.
He said India’s aviation sector, the third-largest in the world, is generally ailing because of high taxes levied on airlines.
According to a government report released in March, domestic air passenger growth in India has already lost its momentum, registering a growth of 5.6 percent in February – the lowest in four and a half years. The last time such a slow growth was reported was in July 2014.
However, since September 2014, the aviation market has been logging a double-digit growth and the trend continued until December last year. But in January this year, the growth dipped to 9.1 percent and slipped further in February.
The depleting growth led to almost all major airlines truncating their schedules. And obviously, Jet Airways was the worst hit.
“This is the state of the aviation market, which is competing to be second-biggest now,” Valiani said.
He said the Jet Airways employees were requesting the government to help the airline with the minimum required funding so that it becomes operational again.
“We have five potential buyers already who have expressed interest in buying the airline," he said. "But we have to make it functional first.”
Valiani said that if the government could pump huge money into the loss-making Air India, the state-owned carrier, “why can't they help an airline which has a potential to rise up again?"
“It is not only the question of 20,000 employees. There will be unimaginable ripple effects for the entire sector and its allied sectors,” the captain said.