Jet airways have finally been grounded. The once mighty airline carrier said in a statement on Wednesday 17th April 2019, that they would be suspending all flights after facing the failure to secure funding from the country’s bank. The airline was struggling from months to stay in the business, but the scarce funding sealed its fate.
“This has been a very difficult decision, but without the interim funding, the airline is simply unable to conduct its flight operations”. Jet airways said in a statement.
The airline’s collapse is the biggest in India after the failure of the escapee billionaire Vijay Malya’s Kingfisher airlines in 2012. It is a huge blow to India’s aviation industry as it struggles to meet the towering demands while keeping the costs low.
For the Indian Prime Minister Narendra Modi this all comes at an inopportune time, he is in the hunt for the PM’s seat for the second time in the row due to the ongoing elections which would conclude on May 23. Opposition parties have been continuously criticizing him for failing to bring down unemployment among India’s youth.
Jet airways were informed by the lenders, led by the Govt.-run State Bank of India, that they would be unable to lend more money to the airlines. Although the company described the suspension of flights operations as temporary, but the absence of funding puts more than 20,000 jobs at stake.
The airlines expressed their gratitude to all its employees and stakeholders that stood by them during this time of distress, passengers would be informed about the shutting down via email and text messages, and they would be able to claim a refund. The airline's operations had already minimized to 40 flights on five aircraft by Tuesday.
The airline career was founded in the early 90s by Naresh Goyal and he along with his dedicated team, went onto dominate India’s airline industry, they accounted for nearly 20% of passengers carried by Indian airlines in 2018.
Yet in recent years it struggled to cut its costs to compete with newer budget airlines like IndiGo, Goair and others. Rising oil prices and the increased volatility of India’s currency just made the matters worse for the airline careers.
Goyal stepped down in late March as part of a planned $218 million bailout that handed control to the banks. But that bailout did not became visible, with Jet Airways saying Wednesday that, the banks were "unable to consider its request" for funds to keep it flying. The banks will continue their search for private investors to buy 75% of the airline. The deadline for bids is May 10.
Etihad Airways, which acquired a 24% stake in Jet in 2013, has been advertized as a possible buyer, but Abu Dhabi's national carrier has problems of its own after losing about $4.9 billion in three years. Etihad said it would support passengers affected by the suspension of flights, but buying Jet airways now is not a possible option for them.
Jet isn't the only Indian airline that is in terrible passages — the country's national carrier, Air India, is surviving on billions of dollars of taxpayer money after a failed attempt to privatize it last year.