Jet Airways, once broke, has announced it will be back in the skies in the summer of 2021 but the new promoters must seek the NCLT and regulatory approvals on time, a seasoned aviation and market expert has said.
Deepak Talwar, who has had considerable experience handling various clients of the civil aviation business, said the government must keep a close watch on the airlines which plan to start both domestic and international operations.
New promoters, Murari Lal Jalan and Kalrock Capital intend to start operations in the summer of 2021. As per the resolution plan, Jet Airways intends to operate all of its historic domestic slots in India and restart international operations. “Everything must go as per the plan and the airlines must seek all regulatory approvals on time,” says Talwar.
The government is yet to announce whether it will return to the airlines some of its assets seized because of financial defaults. “Regaining lost ground and setting new benchmarks will not happen overnight. And the tag of being the best corporate full-service airline will be tough to gain instantly,” he says.
The promoters said the hubs will remain Delhi, Mumbai, and Bengaluru like before. The revival plan proposes to support Tier 2 and Tier 3 cities by creating sub-hubs in such cities. On October 18, 2020, lenders of Jet Airways approved the resolution plan submitted by UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan to revive and operate the airline over a year after the carrier was grounded due to an acute funds crunch under the ownership of its founder Naresh Goyal.
Jet Airways had earlier received bids from two consortiums, one comprising UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan, and the other by Haryana-based Flight Simulation Technique Centre, Mumbai-based Big Charter, and Abu Dhabi’s Imperial Capital Investments Llc. Apart from passenger operation, the new management will also focus on cargo operations to improve the top-line of the airline.
Jalan began his career in the 1980s, with his family’s paper trading business in Kolkata. Jalan worked as a trader for established manufacturers such as JK Paper and Ballarpur Industries. Over the years, he diversified into other sectors and also ventured into new regions such as Russia, the UAE, and Uzbekistan. Later, Jalan diversified into real estate and health care. In 2015, he acquired a stake in Dr. Naresh Trehan and Associates Health Services for Rs 75 crore via a secondary share sale transaction. At present, Jalan is engaged in developing residential and commercial properties in Uzbekistan, including a five-star hotel.
“So it is clear that Jalan does not have an aviation background and members of the Kalrock management, like Manoj Madnani and John Oram, have handled cargo and logistics while working for Polish billionaire Jan Kulczyk. Jet Airways will be a great challenge,” says Deepak Talwar.
Talwar said that there are several hitches on the way. The consortium will first have to settle all the debt Jet Airways owes its creditors, and will then need to pump in fresh capital to support the airline’s operations. Jet Airways owes Rs 40,259 crore to its creditors as of September this year. The company has admitted claims worth Rs 15,525 crore. Financial creditors have claimed Rs 11,345 crore and operational creditors (including workmen and employees) have claimed Rs 27,719 crore. Other lenders have claimed Rs 1,117 crore.
“Efforts to revive Jet Airways come at a time when the aviation sector is going through its worst phase in recent years. The aviation industry will end the current fiscal with a revenue loss of Rs 25,000 crore. It will be one of the most adversely affected sectors of the economy,” says Deepak Talwar market analyst.
He said that Jet Airways will need to become much more efficient. The consortium must modernize the fleet, bringing in more fuel-efficient planes. The airline’s 12 aircraft need to be restored after maintenance and made operational, which would take another three to four months after NCLT gives its approval for the new plan.
“The airline needs to get the premium slots it enjoyed earlier, which had been temporarily allotted to other airlines. And when it went into IBC resolution, it had more than 12,000 employees, and before that, at its peak, had more than 20,000. The interests of the staff will have to be protected as per the provisions laid out in the IBC,” Deepak Talwar adds.
