Why Jet Airways crashed after 26 years flying | Airlines News, Travel news, rss1, rss2



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India is living a madness in the aviation world today. Its citizens are finding that flying is comfortable, fast and now they are also seeing that it can be cheap. However, in this context, Jet Airways collapsed after 26 years operating in the local market as the first private airline.

Jet Airways was founded by Naresh Goyal in 1993. Goyal began working in 1967 as a sales agent for airlines in Lebanon. Subsequently it was passed to other companies until in 1974 it created its own company that was dedicated to commercialize the flights of foreign airlines that operated in India. This company was called Jetair, but it did not have airplanes nor it pretended. I just sold tickets and did marketing.

Goyal, then, becomes a specialist in aviation, mainly in its commercialization. In 1991, India liberalized the aviation market and allowed private companies to operate in the country, ending the monopoly of Air India, the public company. Goyal does not doubt and in May of 1993 he launched his airline, Jet Airways.

Look at the year, long before the low-cost fever. Jet Airways soon became India in which Air Europa or Spanair were in Spain at the time. More like Spanair, because Jet Airways was launched by quality service, not price as a flag. In addition to domestic flights, it extended to Amsterdam, London and Singapore. A great airline, of course. The market recognized and Jet Airways grew and expanded (Jet Airways: 1,100 pilots go on strike).

But with the arrival of the new century, due to the imitation effect of Southwest, Easyjet or Ryanair, India began to see the birth of low-cost companies. The most important are SpiceJet or IndiGo. Here the battle is not for quality, but for price. The flag is to cut costs, a battle in which Jet Airways was not. But India is India, where price is very important, so the problems began to increase. On the one hand, the domestic market began to be very difficult for price competition and, on the other hand, the international market was hampered by the tremendous impact that Gulf airlines, especially the Emirates, have in India (One death announded: Jet Airways stops flying).

With Jet Airways in the red, an investor appeared who certainly did not have a vision for the business: Etihad. The Abu Dhabi company, which bought shares in Air Berlin and Alitalia, also invested in Jet Airways, from which it bought 24% of the capital in 2013. With the support of Etihad, Jet Airways digs its well buying hundreds of new aircraft to meet growing demand. But the underlying problem remained the same: cost control. Or lack of control, yes. Or, to be exact, insufficient control to compete in a market full of very aggressive low-cost airlines.

Jet Airways had customers but did not make any money. Represented 20 percent of the market, which in India is a significant number, but the issue is not flying much, but win with these travelers. And that was not what happened. The bond was put in 2018 the fall of the rupee in relation to the currencies in which the aircraft are paid, fuel and so on. This has led Jet Airways to accumulate major debts and, above all, to stop paying its suppliers. This year, he started dropping planes because he could not pay the rent to the landlords. And that was the inevitable end because when a plane is dropped on the ground, the debt spiral triggers: part of the fleet does not generate income, but costs money. It's the safe route to disaster (Jet Airways now flies only with 5 planes and needs an urgent ransom).

Last February, Goyal had to leave the company as a requirement of creditors, especially the banks. This decision was expected to be a new injection of money and new management. But the banks did not finish approving this capital increase, they said, because they were not sure about the possibility of redirecting the company in the future.

Today, until May 10, an airline redemption is formally possible, though extremely unlikely. The company today does not operate aircraft and the debts continue to grow. The capital that banks did not want to inject so far is increasing day by day, so the chances of a resurgence are minimal.

Jet Airways' shares are still listed on the stock exchange, but their value is almost zero. This week they fell again to almost nothing. But some still cling to this minimal possibility of life, more remote with each passing hour.

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