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Last Updated : Oct 19, 2020 07:35 PM IST | Source: Moneycontrol.com

Five questions for the new owners of Jet Airways

Even as they prepare to take over the controls at the airline, the Kalrock-Jalan combine have a tough maneuvering to do. Jet Airways would want to make use of positive data trends to start off on a strong foot.

Important formalities remain before the Kalrock Capital-Murari Jalan combine takes over the controls of Jet Airways after being declared the winning bid on October 17.

While the announcement was welcomed by celebratory messages, especially by Jet Airways employees, many also point out the challenges ahead in reviving the airline.

What are these challenges? Let's find out

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How to best manage the fleet?

In April 2019, when it grounded operations, Jet Airways had a fleet of nearly 120 aircraft. It had also placed orders to acquire up to 225 Boeing 737 Max aircraft by late 2018. That expansion has now reduced to just 12, including Boeing 777, Boeing 737 and Airbus A330 planes.

"The fleet can't be used efficiently at the moment," said Russian aviation professional Oleg Evdokimov. The Boeing 777 and Airbus 330 are wide body planes, and given the restrictions and limited scope in international operations because of the COVID-19 pandemic, it is unlikely Jet Airways would deploy these immediately. Using them for domestic operations is a losing proposition.

Read: A cat has nine lives. How many does Jet Airways?

"These have higher fuel burn, will need more staff and will also attract more taxes," Evdokimov said. One of the alternatives will be the smaller Sukhoi Superjets manufactured by the Russian aircraft maker, he added.

Eventually, the decision will depend on the revival plan of the new owners - will Jet Airways start off like its old self, with a focus on international routes? Purchasing aside, this is a good time to lease aircraft, with rates at a multi-year low.

International or domestic?

Kalrock-Jalan had initially proposed to start with international operations, but later tweaked their plans. Now they want to start off with flights between metros and scale it up gradually to other sectors. The decision seems sound.

While the Indian domestic market has been recovering slowly but steadily, there is excess capacity at the moment. But the uncertainty is higher for international services, with Europe experiencing a second wave of COVID-19 cases. Some governments have banned Indian carriers like Air India and Vistara from operating flights for a limited period after passengers were found to be positive for the infection, flouting health and safety guidelines.

Latest data from travel agencies say that passenger traffic is improving on metro routes, and Jet Airways would want to make use of that to start off on a strong foot.

Will it get back its slots?

Airlines need airport slots to land and take off. Jet Airways lost all its slots to peers after the government distributed them.

In a market where airlines are yet to reach three-fourth of their capacity, it may not be difficult to get back some of the slots. But that is just in theory. Jet Airways won't be needing many to start off, but it is unlikely that the competition will let go of the slots easily. Intense lobbying is expected, and the new owners will need direct access to the power corridors.

Who is the CEO?

Who will run the airline? Kalrock Capital is a financial services firm, and Murari Jalan is not known to have operated an airline till now.

While the combine had roped in former Jet Airways Chief Executive Officer Nikos Kardassis as a consultant to prepare for this eventuality, will the one-time Naresh Goyal confidant make a comeback? And then there are other critical positions, including operations, commercial and revenue management, that need to be filled.

The consortium will need a CEO who will attract the best of talent.

Many former employees have shown an interest in getting back to the airline, but how many the airline will want back remains the bigger question. And that ample resource pool, available at a lower salary, should work to its advantage.

When will the first flight take off?

The aviation business is different.

Many companies that were admitted to the National Company Law Tribunal (NCLT) continued to operate -- albeit sometimes at minimal capacity utilisation -- even as the search was on for their new owners. But Jet Airways was grounded for over a year.

It will take a complex operation to get the organisation back to flying condition, bringing together all the different parts of the puzzle. How much time will it take?

The first flight of Jet Airways 2.0 may not happen before the first quarter of 2021. Its new owners will be hoping for better market conditions by then.
First Published on Oct 19, 2020 03:17 pm
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