The deadline for Jet Airways corporate insolvency resolution process is October 21
As Jet Airways marks a year of its closure, who would have thought that on the first anniversary, all airlines would be grounded in India? As the flight from Amritsar landed in Mumbai, it marked the curtains on Jet Airways. There was hope back then that the shutdown was temporary, but that has slowly but surely vanished. Repeated attempts to revive the airline, once India’s largest, have fallen flat despite multiple extensions and groups from as far as South America and Russia joining in. History suggests that Jet Airways won't fly again.
Things have never been the same in the Indian market since then. What was largely expected to be a correction in capacity, turned out to be return to normalcy due to the government linking allocation of new slots to increase in capacity. While the growth remained low, it was realistic.
With one airline down, airlines still were finding the going tough and the two listed airlines ended up with losses in Q2, every other airline benefitted from the fall of Jet Airways. However, Vistara, AirAsia India, IndiGo and GoAir punched above its weight and carried more passengers than the additional capacity deployed, while Air India and Spicejet deployed incremental capacity without flying proportional passengers.
While the collapse of Jet Airways had a significant impact on the Indian aviation sector, two things stand out. One, the status of the aircraft that belonged to the airline and two, the evolution of the domestic market itself.
Getting a plane out of India has long been a challenge for the lessor. Several aircraft of the grounded Kingfisher Airlines can be seen still at airports in India. But in Jet’s case, there were customers panting for planes and they were in India at that. Spicejet and Vistara decided to add planes.
It was easy for Spicejet because it already operated the B737 series and had its B737 MAX grounded a month before the Jet Airways saga unfolded. For Vistara, it was complicated because it meant adding a new type of aircraft. Spicejet inducted 31 aircraft while Vistara took 9, two of which are now re-delivered.
Jet Airways continues to have 12 aircraft in its fleet – comprising six B777s which it has on a financial lease, four B737s and two A330s. One of the six B777s remains impounded in Amsterdam.
The erstwhile aircraft of Jet Airways are now flying in 16 countries, including India and they include countries as rare as Togo, Mongolia and as far as Argentina and Brazil. Interestingly, one of the aircraft also got converted to a freighter and became part of Amazon in the United States.
Of the 123 aircraft that were in Jet’s possession, 12 remain with it while 29 are still stored, 40 are in India with Spicejet, Vistara and Trujet.
In a rush to start operations to protect slots, both Spicejet and Vistara started with decals on the planes, refraining from repainting the aircraft in their own livery. While most of these planes in India are now in the livery of respective airlines, such hybrid liveries were operational in Nepal and Poland, with Buddha Air and LOT polish putting the aircraft in commercial operations before changing to their standard liveries.
While the ending is unfortunate, 67 percent of the fleet is flying with some or the other airline. Only the ATR fleet struggling to find a new home.
The Indian market nosedived the month Jet Airways went down, but subsequently recovered to previous levels. While the growth was flattish, it was more realistic. What came out as learning was that a hyper-growth market isn’t always profitable.
IndiGo and Spicejet – the two listed airlines — reported profits in the first quarter of the last financial year. But they were back in losses in the second, even when fuel did not move significantly. This is an indicator of excess capacity in the market because the deployed capacity was back to levels prior to the fall of Jet Airways.
A few airports suffered more than the others, Mumbai airport saw additional domestic seats than before – thanks to higher seats per aircraft for LCCs, Spicejet operated Business class! And yet things did not see any rapid change in Indian aviation.
The air traffic movement took a while to return to pre-Jet Airways levels and passenger numbers stabilised as well, until COVID-19 hit the market. How the market comes out of this is anybody’s guess.
Unprecedented as it may seem, the groundings due to COVID-19 are going to throw up a bigger challenge at aviation in general and Indian aviation in particular. Indian aviation has been working on margins as thin as a boarding pass. Will the story of Jet Airways repeat with another carrier, will the government help with a bailout? Currently, there are more questions than answers.
As for Jet Airways, it certainly looks like the end of the road after a year of fighting to stay relevant and we are at a juncture where the industry has more problems than before.Ameya Joshi runs the aviation analysis website Network Thoughts. Ameya writes a lot on aviation.