India’s Jet Airways is Done

India’s Jet Airways had been largely controlled by minority shareholder Etihad for some time. Jet Airways JetPrivilege was even spun off as a separate business entity so that Etihad could exercise more control over and inject more cash into the combined entity without running afoul of foreign ownership rules.

However Jet became increasingly independent of Etihad as the Abu Dhabi-based carrier has pulled back from its international investments. They hired a Delta Senior Vice President as their new CEO. Then they announced a severing of ties with American as well as with Star Alliance airlines Turkish, Austrian, Lufthansa and Swiss, while becoming closer to Delta and its joint venture partner Air France KLM.

Two years ago it looked like Delta would take a 24% stake in the carrier, but rumors were they wanted more cash from Etihad to do it.


Copyright: boarding1now / 123RF Stock Photo

Jet struggled as investor after investor looked at the carrier, considering the allure of a foothold in the challenging but large and growing Indian aviation market. No one bit. Jet ran out of cash, had planes repossessed.

And finally it is going to shut down as no one would make a bridge loan on the expectation that they’d just be coming back for more cash.

India’s embattled Jet Airways Ltd is set to temporarily halt operations from Wednesday onward after its lenders rejected the airline’s plea for emergency funds, three sources from inside the company said on Wednesday.

The airline, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.

Their last flight is reportedly to be from Amritsar to Mumbai, Jet Airways 3502, taking off in about 2 and a half hours. However I’m also seeing that flight as cancelled.

The largest private airline of India, which had a fleet of over 120 aircraft, is being grounded amidst debts to lessors, fuel suppliers, pilots, and banks. There’s talk that this is ‘only temporary’ but once shut down airlines rarely start back up (and it’s pretty much never a good idea for them to). At most branding gets purchased out of the ashes and a new carrier with a new business model might operate under the old name.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. One big reason, that has not been covered by any blogs, is the many taxpayer funded bailouts of Air India by successive administrations. Air India has operated on a perma-loss basis and is the only real “full service” carrier to compete with Jet. Jet literally couldn’t compete because AI has shown an essentially unlimited loss taking capability.

    Sad days for Indian aviation.

  2. What a shame. I flew Jet in J AMS-BOM and BOM-LHR and really enjoyed the experience. Food was stellar (for airplane food). RIP.

  3. @Gary So, you didn’t mention in this story how much you beat down AA for “being outmaneuvered” by DL for Jet. Is that just going to be swept under the rug?

  4. Spicejet shut down for one day in 2014 but was recapitalized by its founder, and regained its prominence as a major Indian airline.

  5. @hotintx – they WERE outmaneuvered. Jet didn’t turn out to be a long-term winning play, but American didn’t ‘walk away from them because they believed they were going down the tubes’ …

  6. @ hotintx They were. Jet’s failure doesn’t make that any less true … it just makes the maneuver less valuable to Delta over the long term.

  7. Flew Jet twice from BOM to SFO in F. Their wine was absolutely amazing as was their suite. They served Jadot Chambertin Clos De Beze. The senior FA were all ex SQ and juniors were in training under the guidance of the ex SQ crew. Probably two of the best flights I have ever taken.

  8. Why is no one talking about the trend of airline bankruptcies and going out of business when Etihad is your investor? Seems to me that there is something wrong with Etihad knowing how to run an airline. Air Berlin- defunct, Alitalia- bankrupt for over a year, Jet Airways-defunct and on top of that Etihad doesn’t look to good themselves.

  9. Gary,
    Have not seen much discussion about what to do with JetPrivilege account balances. Should we be rushing to redeem points for merchandise, partner flights (if possible) etc. or is the program safe even if Jet Airways does not resume operations. Your insights would be appreciated.

    Thanks

  10. India Jet Airways might be a done deal, but there’s millions in “travel affiliate marketing $ gUaP $” waiting quietly to be earned by “travel affiliate marketers” looking to achieve “side hustle millionaire” status.

  11. In plain English, I don’t think you’re “outmaneuvered” if the partner your competitor “stole” from you shortly thereafter goes belly-up. You could call AA lucky, I suppose. More accurately, you would call them prescient. I mean, just look at the history of Jet. It wasn’t a successful history.

  12. @chopsticks – American certainly did not know that Jet Airways was going to fail. The fact that this didn’t wind up as badly for them because Jet Airways failed doesn’t negate it being a strategic blunder based on available information at the time.

    Calling them prescient is a stretch, NO ONE there was talking about this as an airline to stay away from.

    Delta certainly thought it was a great strategic opportunity at the time, until it wasn’t.

  13. @Zach – airberlin and Alitalia were basket cases before Etihad got involved, not because of Etihad’s involvement. Etihad hasn’t been really involved in the day to day at Jet for quite some time. Indeed the person who was running the airline is ex-Delta.

  14. Sad day. 9W was a good carrier. Just couldn’t manoeuver the competitive minefield with good low-budget airlines on one side and bottomless subsidies to AI on the other.

    Naresh Goel went down fighting. A class act, my salute and best wishes tp him. Compare this with Mallaya (of Kingfisher) who ran away to London with the others’ money.

  15. So I was notified a week ago that a planned flight for May on Jet Airways was canceled, and I requested a refund online. Does this mean that no refund is possible?

  16. Goodbye, good riddance, couldn’t have happened to a more deserving bunch. Qatar transferred my wife and me, without our consent, to a Jet Airways flight from Doha to Delhi when our Qatar airplane had a mechanical problem. As we pulled back from the gate, we saw all our suitcases sitting on a cart — they’d deliberately not loaded them. Every day in Delhi we made the trek to the airport, and we were promised the luggage would arrive on the next flight. Three days later, the President of the Indian travel firm we were using for guides and ground transportation called a Jet Airways executive to complain. Still nothing. The next day he called and threatened to sue Jet Airways and the executive individually. The luggage arrived that night.

  17. I have a ticket on a Jet flight issued by Delta (code share) for late May. Delta refuses to change the flight without paying the fare difference because they believe that Jet will fly again. How can I get a no fee change/cancellation?

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