plans to take off Jet Airways not without turbulence


The plan to relaunch Jet Airways in the air is not without turbulence

When Jet Airways was embroiled in a bankruptcy resolution process in June 2019 – just two months after being forced to suspend operations due to unsustainable debt and mounting losses – there was a feeling its collapse validated the popular theory that India simply did not have a viable market for a robust full-service airline. Vijay Mallya’s Kingfisher Airlines passed away at the end of 2012 after drowning in debt. State-owned Air India has been racking up losses for years and the decision to privatize it seems to come to naught. The National Company Law Court has now approved a resolution plan for Jet Airways proposed by little-known Dubai entrepreneur Murari Lal Jalan and London-based Kalrock Capital, who have no aviation experience. The Jalan-Kalrock resolution plan is amazing. He promises to pay only 12 billion rupees of the 155.25 billion rupees, just under 8% of the dues the airline owes to banks, financial institutions, operational creditors, employees and travelers who kept the ticket reimbursement stubs. for well over two years. Indeed, the new owners will be heading to the Indian Air Force tarmac at a surprisingly low price.

The Ministry of Civil Aviation and the Directorate General of Civil Aviation – the regulator – appear to have deep concerns about the Jet Airways bailout. This is why they successfully challenged before the NCLT the principle of historicity on the basis of which Jalan-Kalrock was trying to recover its rights to the landing slots of airports without which the airline cannot resume operations. The NCLT has given new owners 90 days to apply for approvals for slot allocation with the option to extend that time frame. Jet slots have already been ceded to rival airlines. But even on the basis of historicity, the new owners cannot reclaim all the niches. The International Air Transport Association’s slot allocation guidelines, which member countries follow, establish a narrowly defined use-or-loss principle. Historical precedence can only be granted if the airline operated at least 80% of the time during the previous equivalent season.

Many believe that Jet should be cleared for quick take-off. The resolution plan, which has not yet been revealed, apparently argues in favor of domestic and international operations with narrow and large aircraft. The plan is to bail out the airline by December. It will be quite easy to rent planes and recruit employees; it will be more difficult to negotiate maintenance, technical assistance and airport management contracts. The biggest stumbling block will be winning back slots at Tier 3 airports like Delhi and Mumbai, where demand typically exceeds supply. The pandemic has forced airlines to operate at 50% of their capacity, but they are poised to ramp up as soon as the economy recovers. This is when the slot machine race will get really messy.

Leave A Reply

Your email address will not be published.