TIMELINE OF JET AIRWAYS: A TURBULENT JOURNEY
A newly liberalized India had catapulted Jet Airways to be one of the first successful airline operators. However, it has recently found itself in a financially crippled state and mounting debt. The following write-up shall lay down a road map of significant developments which charter the rise and fall of one of the biggest full-service carriers in India.
INITIAL GROWTH
1993: The P.V. Narasimha Rao led government opened Indian Airlines to private operators. Sparked the launch of Jet Airways as a private operator in the Indian market.
May 1993: Jet Airways began its operations.
March 1994: Air Corporation Act, 1953 was abolished and was replaced by Air Corporation (Transfer of Undertaking and Repeal) Act, 1994. Privatization was favored over governmental incompetence in the running of the aviation industry. Conceptually, privatization was envisioned as a policy step towards minimal interference from the government and to boost the role of the private sector in Indian industries. The policy revision enabled private operators to operate scheduled services and a number of private players including Jet Airways, Air Sahara, ModiLuft Airlines, Damania Airways, NEPC Airlines, and East West Airlines commenced domestic operations.
June 1999: Jet Airways announced an order worth approximately $550 million for 10 Boeing 737-800 aircraft.
April 2001: The airline fleet had grown to 30 aircraft and was operating over 195 flights daily to 37 destinations within India. Thus, leading to high operational costs.
April 2002: Jet Airways suffered a loss for the first time since its establishment in the financial year 2001-2002 as demand fell and costs increased.
March 2004: Pursuant to the government’s order in 2003, Jet Airways starts international expansion.
January 2005: Indian Scheduled carriers with a minimum of 5 years of continuous operations and a minimum fleet size of 20 aircraft were permitted to operate scheduled services to international destinations. The Government designated Air India, Indian Airlines, Jet Airways, and Air Sahara to start operating international services.
MERGER AND CONSOLIDATION
January 2006: Jet Airways looks to buy over Sahara for over $500 million.
April 2007: Jet Airways acquired Air Sahara for $340 million and the combined entity becomes the largest airline operator in the country with an over 30 percent market share. Air Sahara was renamed as JetLite.
October 2008: Over 1900 employees sacked without notice. Although they were re-instated, fissures and communication gaps were visible in the top management[1]. Subsequently led to the formation of the Union of National Aviators Guild for voicing the employee grievances. Played an important role in future NCLT proceedings. In the same month, entered into a partnership with rival Kingfisher Airlines for code sharing on domestic and international flights and frequent flyer programs.[2]
March 2012: Jet Airways merged the JetLite into Jet Konnect and started offering business-class seats after the fallout of Kingfisher Airlines.
September 2012: RBI Notification, allowing FDI Investment into Airlines for up to 49%.
November 2013: Etihad had bought a total of 24 % stake in Jet Airways. Etihad Airways invests about $380 million in Jet Airways.
August 2014: Jet Airways phase out Jet Konnect by the end of the year as part of plans to re-position itself as a uniform full-service operator.
2018: The airline reportedly posted a net loss of Rs. 1,036 crores in March 2018 quarter. After delaying the announcement of its quarter two results for 18 days, Jet Airways said it had incurred losses of Rs. 1,323 crores ($189.2 million) in the April-June period, mainly due to sharply rising fuel prices and a weak rupee[3], then a net loss of Rs. 1,297.46 crores in September quarter and further in December quarter, a net loss of Rs. 587.77 crores.[4]
December 2018: Jet Airways defaults on debt repayments for the first time with a total debt of Rs. 8,000 crores.
February 2019: Jet's Board of Directors considered and approved a Bank Led Provisional Resolution Plan (BLPRP), which estimated a funding gap of around Rs. 8,500 Crores (including proposed repayment of aircraft debt of around Rs. 1,700 Crores).
March 2019: Founder Naresh Goyal steps down as chairman, wife Anita Goyal resigns from the board, as banks take control to save the airline.
April 2019: Jet Airways announce the temporary shutdown of its operations after lenders turn down a request for funds.
14 June 2019: India’s aviation regulator (DGCA) cancels critical authorizations to Jet Airways’ engineering department, rendering the grounded airline defunct and unable to carry out any maintenance work on aircraft, said three people aware of the matter.
June 2019: After getting no acceptable offers from Etihad Airways and Hinduja Group, lenders finally decide to refer the matter to NCLT for resolution. The consortium of lenders, led by the State Bank of India (SBI), chose to refer Jet Airways to the National Company Law Tribunal (NCLT).[5]
June 2019: After admitting the plea against Jet Airways, the NCLT bench has appointed Ashish Chawchharia as the Interim Resolution Professional (IRP). The NCLT has tasked the IRP to create a status report on the resolution of the process every fortnight.
July 2019: The IRP filed its first progress report on the resolution process for the airline. The tribunal adjourned the matter to July 23, when the IRP would have to file the second progress report.[6] The court appointed IRP, has suggested the tribunal to stall the de-registration of Boeing 777 aircraft which belongs to Jet Airways since the airline is under moratorium period of the bankruptcy process.[7] Furthermore, the tribunal said it will issue a notice to one of Jet Airways’ lessors and regulator Directorate General of Civil Aviation (DGCA) to make an appearance on 19 July. Even though the IBC 2016 provides for six months to complete the bankruptcy proceedings, the tribunal has directed the IRP to complete the process in three months citing ‘national importance’.[8]
[This post has been authored by Anish Lakhanpal, fifth year law student of Jindal Global Law School, O.P. Jindal Global University during his course of internship at Sapphire and Sage Law Offices and Karan Dhingra, Legal Manager, Sapphire & Sage Law Offices]
[1] Jet Airways Timeline: When and what happened so far, Mathew Thomas, Money control, April 8 2019. https://www.moneycontrol.com/news/business/jet-airways-timeline-when-and-what-happened-so-far-3846461.html
[2] Kingfisher, Jet in cost saving alliance, Rediff Business, October 14, 2008:
https://www.rediff.com/money/2008/oct/14jet.htm
[3] Why did Jet Airways fail- Quartz India, Kamalika Ghosh, April 17, 2019: https://qz.com/india/1397478/why-did-jet-airways-fail/
[4] Jet Airways Timeline: When and what happened so far, Mathew Thomas, Money control, April 8 2019. https://www.moneycontrol.com/news/business/jet-airways-timeline-when-and-what-happened-so-far-3846461.html
[5] Live Law News Network, Jet Airways Hearing updates, 21 June 2019: https://www.livelaw.in/news-updates/nclt-admits-sbis-insolvency-petition-against-jet-airways-145818
[6]Jet approaches NCLT against lessors' to de-register aircraft, eviction from HQ, The Hindu Business Line, 5 July 2019, https://www.thehindubusinessline.com/economy/logistics/jet-approaches-nclt-against-lessors-move-to-de-register-aircraft-eviction-from-hq/article28297895.ece
[7] NCLT to next hear Jet Airways case on 23 July, Live Mint, 5 July 2019, https://www.livemint.com/companies/news/nclt-to-hear-jet-airways-case-next-on-23-july-1562328123406.html
[8] NCLT to next hear Jet Airways case on 23 July, Rhik Kundu, 05 July 2019, livemint, available at: https://www.livemint.com/companies/news/nclt-to-hear-jet-airways-case-next-on-23-july-1562328123406.html