Saturday, May 11, 2019

As Jet fails to take off, foreign airlines fly in

Jet Airways’ loss is others’ gain. As Jet Airways disappeared from the radars, rival carriers, especially money-loaded foreign airlines, are jumping in to take advantage of the gap in the Indian aviation market. Most of them have taken steps to add capacity, add routes and fill in the gaps created by Jet Airways.

The grounding of Jet Airways put a spoke in India’s fledgling aviation sector. Aviation pundits are still wondering about the factors which caused the downfall of an international carrier which was a major player on several lucrative sectors. It is still astounding that Jet Airways is down with a huge debt. Don’t blame the fluctuations in aviation fuel price or India’s age-old red tape for the fall. It is pure mismanagement of funds and failure to gauge the under-currents in the aviation sector.

Jet Airlines failed to learn lessons from its erstwhile rival Kingfisher. Failure to prepare is to prepare to fail. Instead of focussing its attention on the needs of its nearly billion client base, the Jet management under Naresh Goyal focussed on various ways to fleece the company. Funds were misused and budgets were compromised to generate easy funds to settle dubious deals. Survival in this sector needs financial discipline and the management’s agility to tide over crisis. The competition in the market is tough and in some cases the profits are mere 2 cents per ticket.
Kingfisher Airlines, founded by the “King of Good Times” Vijay Mallya, ceased operations in 2012 after failing to clear its dues to banks, staff, lessors and airports. SpiceJet’s tryst with bankruptcy was halted when its founders returned to regain control and revive the company. The erstwhile Maharajah—state-run Air India Ltd—is surviving on bailouts worth billions of dollars from the government. Apart from Etihad, Singapore Airlines and Air Asia have also set up local ventures, but they are also making a loss.

What went wrong with Jet Airways is an open secret. The Ministry of Corporate Affairs (MCA) will soon ask the Serious Fraud Investigation Office (SFIO) to probe the alleged diversion of funds and writing off of investments by Jet Airways. The fresh investigation follows recommendation given by the MCA’s Mumbai regional office after inspecting the airline’s books.
In Jet Airways’ preliminary probe, the Registrar of Companies, RoC, (Mumbai) told the MCA that it has found violation of Companies Act and unaccounted investments, official sources said, adding the natural way forward is an SFIO probe.
The SFIO will now look into Jet Airways’ written-off investments in various subsidiary companies and try to source where they have landed. The SFIO will also start the process for seeking personal appearance of the company’s then top management in an attempt to find out why the company suddenly posted a loss in the fiscal year 2018 after a string of profits.
11/05/19 Kamal Shah/Sunday Guardian Live
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