Many years ago when Air Deccan had just started its services, this columnist met GR Gopinath, founder of India’s first low-cost carrier, in a south Delhi guesthouse. Gopinath is a man who is never shy to speak his mind. He made it very clear during my meet that his plans were being held up by Naresh Goyal, the founder chairman of Jet Airways. He called Goyal the best connected person in the Indian aviation sector and swore that Air Deccan would still manage to soar.
In fact, Gopinath reiterated these allegations in a column for The Economic Times last week as the Jet Airways crisis reached its end-game. This is not for the first time that Jet Airways is faced with an existential crisis. This could, however, be the first time that Goyal and his airline will not survive unscathed with the airlines’ very existence in doubt.
This was certainly not how Goyal or Jet Airways employees had thought their silver Jubilee year would come to an end. After all, the airline faced it all — change in ownership, regulations, Governments and even rivals — and survived everything. Jet is the only airline from the mid-1990s aviation boom — when the Government opened domestic services to private carriers — to have survived. This despite an almost public humiliation by Vijay Mallya when the bombastic businessman spoke of a potential Jet-Kingfisher merger after Jet laid off thousands of cabin crew amidst a payments crisis. Goyal and Mallya had a famous late night press conference where the latter almost lorded over the former.
Yet, the reticent and media-shy Goyal had the last laugh when Mallya came crashing down to earth harder than Icarus. But his battle with Mallya is what doomed both men as they went for ill-advised decisions to buy Air Sahara (Goyal) and Air Deccan (Mallya). These financially profligate decisions destroyed the finances of both the companies.
A decade after buying Air Sahara, Jet Airways was unable to fully integrate the airline into its operations, not for any fault of its own but the way the airline industry is regulated in our country. But as Mallya and Goyal fought, new entrants to the Indian aviation market, particularly Indigo, that flooded the market with capacity and lower fares, was what sounded the death knell for Kingfisher at first and also likely doomed Jet Airways into a long, slow decline.
One white knight that Jet Airways found was the Abu Dhabi-based airline, Etihad. Early in 2014, Etihad pumped in money into Jet Airways and made the Indian airline part of an ambitious global alliance of airlines that included the German carrier, Air Berlin; Italian national carrier, Alitalia; Serbian national airline JAT; and some other small airlines across the world. This was all part of a scheme to build traffic through its hub in Abu Dhabi to compete with the Dubai-based Emirates airline in a seeming clash of egos.
Since then though, Etihad has bled money and has shuttered many of its routes. It refused to sink more money in Air Berlin, which went bust last year and surrendered its stake in Alitalia that is currently on life-support in not a very different situation to Jet Airways. With Etihad’s losses totalling over $4 billion, there has even been murmurs that the airline will merge with Emirates.
26/03/19 Kushan Mitra/Pioneer
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In fact, Gopinath reiterated these allegations in a column for The Economic Times last week as the Jet Airways crisis reached its end-game. This is not for the first time that Jet Airways is faced with an existential crisis. This could, however, be the first time that Goyal and his airline will not survive unscathed with the airlines’ very existence in doubt.
This was certainly not how Goyal or Jet Airways employees had thought their silver Jubilee year would come to an end. After all, the airline faced it all — change in ownership, regulations, Governments and even rivals — and survived everything. Jet is the only airline from the mid-1990s aviation boom — when the Government opened domestic services to private carriers — to have survived. This despite an almost public humiliation by Vijay Mallya when the bombastic businessman spoke of a potential Jet-Kingfisher merger after Jet laid off thousands of cabin crew amidst a payments crisis. Goyal and Mallya had a famous late night press conference where the latter almost lorded over the former.
Yet, the reticent and media-shy Goyal had the last laugh when Mallya came crashing down to earth harder than Icarus. But his battle with Mallya is what doomed both men as they went for ill-advised decisions to buy Air Sahara (Goyal) and Air Deccan (Mallya). These financially profligate decisions destroyed the finances of both the companies.
A decade after buying Air Sahara, Jet Airways was unable to fully integrate the airline into its operations, not for any fault of its own but the way the airline industry is regulated in our country. But as Mallya and Goyal fought, new entrants to the Indian aviation market, particularly Indigo, that flooded the market with capacity and lower fares, was what sounded the death knell for Kingfisher at first and also likely doomed Jet Airways into a long, slow decline.
One white knight that Jet Airways found was the Abu Dhabi-based airline, Etihad. Early in 2014, Etihad pumped in money into Jet Airways and made the Indian airline part of an ambitious global alliance of airlines that included the German carrier, Air Berlin; Italian national carrier, Alitalia; Serbian national airline JAT; and some other small airlines across the world. This was all part of a scheme to build traffic through its hub in Abu Dhabi to compete with the Dubai-based Emirates airline in a seeming clash of egos.
Since then though, Etihad has bled money and has shuttered many of its routes. It refused to sink more money in Air Berlin, which went bust last year and surrendered its stake in Alitalia that is currently on life-support in not a very different situation to Jet Airways. With Etihad’s losses totalling over $4 billion, there has even been murmurs that the airline will merge with Emirates.
26/03/19 Kushan Mitra/Pioneer
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