Monday, August 06, 2018

Woes mount at Jet Airways: How did the airline get here?

Jet Airways has been waging a battle on several fronts in recent months but lately, India’s second largest airline by passengers has had to face bad press too. After a statement allegedly made by chairman Naresh Goyal went public, indicating a delicate cash position at the airline and urging employees to take a steep and prolonged pay cut, the Jet scrip was hammered at the bourses.

Some pilots began speaking out against the top management for proposing such pay cuts while also being responsible for the current mess. Jet has been waging a tough battle on costs and the latest salvo was asking pilots and other employees to take a pay cut of up to 25 percent to help the company tide over the present crisis.

How did the airline reach this crisis, with precious little cash and the crying need to snip wages? All fingers point to the external cost environment but this is affecting all airlines operating in India, not just Jet. Why Jet and the Air India (both are full-service carriers) are impacted more than the LCCs by external cost factors has to do with their full-service model where costs are necessarily high.
06/08/18 Sindhu Bhattacharya/CNBC TV18