Jet’s Collapse: Employees suffer, Lenders looking for buyers, Windfall for others

Aviation India News

Jet Airways, now a fully grounded airline, was forced to discontinue its operations from April 17, 2019. The SBI-led consortium of lenders did not see any viable logic in providing any further funding to Jet Airways.

Employees left high and dry.

The employees of the airline have been the worst hit. Over 20,000 employees have not been paid their March salaries. April salary is due in a few days. Worse, there is no sign of relief in near future.


On Friday the employees had planned to take out a peace walk towards the venue of Prime Minister Narendra Modi’s election rally, but was cancelled at the last minute on request from the police and the state government.

The lenders did not give earlier a Rs 983-crore lifeline to help carry out operations. Payment of salaries is ruled out because the lenders do not see any ability in the airline to earn sufficiently under the present circumstances so that they can recover their loans. Lenders are reluctant on further funding to Jet Airways which was once the nation’s biggest airline. They are presently trying to find a buyer for the airline and they the employees would preserve the value of Jet Airways during the bid process. The banks have said they are unable to make any salary commitments, until after the bidding process is complete.

Jet is now hoping to be bailed out by a new investor, with final bids due on May 10.

Other Airlines minting money

The grounding of Jet Airways is turning into a quick windfall and long-term opportunity for other domestic and international airlines. They are very keen to scoop up nearly a million outbound passengers. Jet’s descent into crisis has undoubtedly benefited other airlines by way of rising demand, reduced supply and increased fares.

As per sales at NC Airways, fares from India to cities such as Dubai, London, New York, Singapore and Bali in the first quarter of 2019 rose between 3.8% and 31.5% from a year ago. In the peak travel months of May and June, fares to London have spiked as much as 36 % and tickets to San Francisco are up nearly 20 percent from a year ago.

Jet’s grounding has had a huge impact on the domestic market, with inter-city air fares to major cities such as New Delhi, Mumbai, Bengaluru and Kolkata soaring more than 20 percent in May and June.The spike in fares is expected to boost earnings for IndiGo and SpiceJet Ltd, which are set to report results for the quarter ended March 31 in the coming weeks.

Given the conditions, it seems that for the next three months that it’s actually bonanza time for all other airlines. At least until the middle of June, the fares are not going to come down.

India is one of the world’s fastest-growing aviation markets, clocking 15-20% domestic growth in recent years. The Indian market is “very promising”, the demand patterns are expected to grow significantly in the wake of Jet’s exit.

Due to the rising demand, even before Jet’s lessors grounded planes, carriers such as British Airways, Cathay Pacific Airways Ltd, Singapore Airlines Ltd and United Airlines saw an up to a 27% increase in passenger numbers from India in the last quarter of 2018, data from India’s aviation regulator, the DGCA, showed.