Friday, October 23, 2020

What’s The Next Step In Reviving Jet Airways?



Last week’s announcement that Jet Airways has a new owner has many excited about the airline’s return to the skies. However, the airline still has a lot of work to do before it can resume flights. So, what are the next steps in reviving Jet Airways?

Before the revival process formally begins, the NCLT, India’s bankruptcy tribunal, has to accept the plan put forward by the new owners, Kalrock Capital and Murari Lal Jalan. They will also have to explain how they plan to pay off Jet’s massive debt of over $3bn to various creditors.

Once the plan clears the NCLT, Jet’s new owners will have to hire a fresh management team for the airline and operations staff. While the management team will be new, we might see some of those laid off from Jet last year possibly return to the new airline. For now, it’s unclear what the plan is and how many staff will be hired.

The new owners have reportedly offered $136 million (₹1,000 crores) to fund the airline and restart operations. While this will allow for some important maintenance and staff, the airline will likely need a lot more to re-establish itself as a major carrier and pay down debts. Where the airline will get more funding, considering its debt and the current crisis, remains to be seen.

Jet Airways’ collapse last year resulted in its lucrative domestic slots being reallocated to other Indian airlines. These slots have been on temporary lease ever since, with the government routinely extending the rights to Jet’s domestic competitors.

With Jet Airways now possibly returning to the skies, it’s unclear if the airline can simply swoop in and reclaim these slots, which would undoubtedly have an impact on competing airlines. The coming months will offer more clarity on the status of Jet’s slots, which has long been a sticking point.

Jet Airways plans only to resume a handful of domestic routes at first, which means it likely does not need so many slots. However, as the airline grows operations, it could end up in conflict over its original slots.

The final hurdle for Jet Airways will be to acquire aircraft. The airline currently has a fleet of 12 planes, with six 777s, three A330s, and three 737s. The three narrowbodies won’t be enough for domestic routes, making it likely the airline will try to lease more aircraft in the future. With international flights unlikely to pick up soon, there is little use for the 777s and A330s.

23/10/20 Pranjal Pande/Simple Flying

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