Issues concerning Jet Airways
Receiving a series of awards, Jet Airways were once providing the high quality
service and incredible experience for its passengers. Owning to its financial
crisis, Jet Airways stopped its operations on April 17, 2019. Will it fly again
and revive its past glory? Well, the Jet 2.0 program aims at restarting the
grounded airways and to ensure its efficiency and productivity.
Jet Airways (India) Limited was incorporated under the Companies Act in
1st April 1992 as a private limited liability company with its registered
office at Siroya Centre, Andheri (E), Mumbai, Maharashtra. The airline started
its operation in 1993 as an air taxi operator. By 1995 they started their full
operation and were granted a scheduled airline status.
In 1996, airline ordered
for four 737-400 and six 737-800 aircraft from Boeing. In 1999, airline for
expanding further announced an order for ten Boeing 737-800 aircraft. And by
2001, they had grown to 30 aircraft. In the year 2003, the Indian government
gave them the authorization to launch international routes. The first one flew
from Chennai to Colombo.
On 28th December 2004, it became a public company and got listed on Indian
exchanges. In 2005, the airline started its first international long haul flight
to London with two-class Airbus A340-300s. It acquired Air Sahara in 2007 and
renamed as JetLite. In 2008 it entered into alliance with Kingfishers Airlines.
On May 2009, it started another low-cost carrier, Jet Konnect. They sold off 24%
of their firm to Etihad when Indian government allowed foreign airlines to buy
Indian local carriers up to 49%. With 22.5% market share of air traffic, Jet
Airways became India�s largest airline in 2010.
By the arrival of SpiceJet and IndiGo, then glorious Jet Airways were forced to
reduce the ticket price. This marked the beginning of the end for Jet Airways.
To stay competitive with the newcomers, they took more loans. As of February
2016, it is the second largest airline in India with 21.2% passenger market
By November 2018, they faced huge losses and owe money to aircraft leasing
firms, various lending institutions etc. On 25th March 2019, Mr. Naresh Goyal
and his wife stepped down from the board of directors. Unable to manage their
financial crisis, quarter of their fleet were grounded. On April 5th 2019, Jet
Airways� fuel supplier, Indian Oil Corporation refused to refuel their planes
until they had been paid.
Leaving no choice, India�s Jet Airways temporarily suspended all its flights and
last flight S2-3502 took off from Amritsar on April 17, 2019 at 10:30 PM. And
they said they are unable to pay for fuel and other critical services due to
lenders rejecting emergency funding. Its membership in IATA was suspended.
On 17th June, lenders decided to refer the company to National Company Law
Tribunal (NCLT) for bankruptcy proceedings. On 20th June 2019, the
petition under section 7 of Insolvency and Bankruptcy Code,2016 filed by State
Bank of India (Financial creditor/ Petitioner) against Jet Airways (India)
Limited (Corporate Debtor) [ CP 2205(IB)/MB/2019] , for initiating corporate
insolvency resolution process (CIRP) was admitted and also declared moratorium
under section 14 of I & B Code. The two other petitions [CP 1968/2019 and CP
1938/2019] filed under section 9 of I&B was dismissed and held that the
petitioners in these company petition are at liberty to file their claim before
the resolution professional appointed in CP 2205/2019.
Grand Thornton and SBI Capital Markets have been appointed as professional
advisors and process advisors respectively. Mr. Ashish Chhawchharia( National
head of restructuring practice for Grant Thornton) has been appointed to take
forward the CIRP process. The powers of the board of directors of the company
were suspended and were vested with resolution professional.
The National Company Law Appellate Tribunal ( NCLAT ) allowed the Dutch
Administrator of Jet Airways to participate in the committee of creditors(CoC)
meetings. This was against the order of NCLT Mumbai Bench which declared
overseas bankruptcy proceedings as null and void. Jet Airways became the first
Indian company to face cross border insolvency protocol along with Insolvency
and Bankruptcy Code of India.
In July 2019, the first progress report on the case was filed by insolvency
resolution professionals. On 20th July 2019, Company Information Teaser was
published which highlighted the strength of Jet Airways and its brand strength.
It showed the possibilities that a buyer would come. The resolution professional
floated EoIs ( Expression of Interest) for selling the stake in the airline. The
invitation for EoI was published in accordance with regulation 36A of the
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016.
The revival plans submitted by a consortium led by the Dubai based businessman
Murari Lal Jalan as well as London based Asset Management Company Kalrock
Capital was approved by the committee of creditors (CoC) for the bankrupt Jet
Airways. The e-voting was concluded on October 17,2020 and the resolution plan
submitted by the consortium was approved under section 30(4) of the Insolvency
and Bankruptcy Code. The revival plan was then submitted to NCLT, Mumbai for
approval in accordance with section 30(6) of the code.
The tribunal then issued a notice to Directorate General of Civil Aviation (DGCA)
and Ministry of Civil Aviation (MoCA) to clear their stance on Airport slots.
The aviation regulator DGCA and MoCA said that the slots were allocated
temporarily to other airlines when the carrier stopped its service in April,
They informed NCLT in March 2020 that the consortium will have to apply afresh
for the slots and they refused to give assurance on slot issue. The National
Company Law Tribunal granted more time to respond on the slot issue. Now the
main issue for delay is the clarity regarding Jet Airways slots.
Currently the winning bid for Jet Airways is before Mumbai NCLT bench for
approval. The NCLT bench is now hearing on the slot issue. The Civil Aviation
Ministry, regulation DGCA and winning bidder is expecting that the issue will be
resolved soon. The consortium is planning to start the airways with 25 aircrafts
and scale up to 125 aircraft in 5 years.
As on 15/07/2019, the fleet size reduced to 12 aircrafts i.e. 6 Boeing 777, 3
Airbus 330 and 3 Boeing 737. Out of 6 Boeing 777, one aircraft is seized at
Amsterdam Airport. Murari Lal Jalan , the lead member of consortium said that
they got an excellent opportunity in this pandemic situation. Their liability
and cost are going to be minimal. If they get clearance from NCLT, they will
pass the main obstacle and Jet Airways will soar again in the sky.
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