Wednesday, September 15, 2021

Jet Airways Take-off: Can The New Management Overcome These Challenges?

Two years after getting grounded due to a lack of funds, Jet Airways, India’s oldest private sector airline, will resume operations in the first quarter of 2022. But is it a good time to take off for the airline under the new leadership led by London-based Kalrock Capital and UAE-based businessman Murari Lal Jalan?

Airlines all over the world have suffered heavy losses due to restrictions on travel to contain the Covid-pandemic, pushing them to resort to cost-cutting measures and operating with a leaner workforce. A report by aviation consultancy and research firm, Centre for Asia-Pacific Aviation (CAPA) projects a loss of $3.9 billion for Indian airlines in FY22. 

Rating agency ICRA expects overall cash loss for the sector at around Rs 3,500 crore in FY2021, impacted by a 66% year-on-year slip in passenger traffic amid Covid-induced travel restrictions. Mark Martin, founder and CEO of Martin Consultancy, an aviation consultancy and safety firm is of the view that the private airline will find it difficult to resume its operations in the first quarter of 2022. “The company will have to hire new pilots, train the staff and work on several other operational glitches before flying. It is not easy to make a comeback so fast with a new fleet of staffers.”

Apart from low traffic and the fear of deadly Covid waves, another challenge for Jet Airways would be managing the cost of fuel. 

In a statement, Murari Lal Jain said that Jet Airways, after resuming domestic operations in the first quarter of 2022, will also target short-haul international operations by Q3-Q4 of 2022. “We plan to have 50 plus aircraft in three years and over 100 aircraft in five years. This also fits perfectly well with the short-and long-term business plans of the consortium. The aircraft are being selected based on a competitive long-term leasing solution,” said Murari Lal Jalan. The consortium has already hired around 150 employees and is in discussion with aircraft lessors. 

14/09/21 Neeraj Thakur/Outlook

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