Why Did Jet Airways Fail? Will The Airline Fly Again? Crisis Explained
Why Did Jet Airways Fail? Will Jet Airways Ever Fly Again? Crisis Explained
As the deadline for the bids to buy Jet Airways looms, the $1.2 billion debt-stricken airline is likely to go down into the history books.
At one time, Jet Airways was the biggest and arguably, the best airline in India. With the rapidly expanding aviation market and more Indians choosing air travel as their primary way of reaching their destination, Jet Airways seemed like it was destined for success.
The privately owned carrier enjoyed very high highs. With over 120 aircraft flying to almost 1000 destinations, it seemed like Jet Airways had overcome the odds. Previous to this, privately owned airlines in India did not fare well. For example, Vijay Mallya’s Kingfisher Airlines went down in a very similar, but different fashion. While Jet Airways ran profitably for a number of years, Kingfisher Airlines on the other hand, never enjoyed a profitable year.
But while Jet Airways enjoyed the highs, it also stumbled to very low lows.
And today, with the window of opportunity to save Jet Airways closing, and no company putting out a serious bid for the troubled airline, it seems like this is the end.
So, the question on everyone’s mind is: Why did it fail, when it seemed like success was the only option for Jet Airways?
Let’s go down the rabbit hole and try to understand the reasons behind the bankruptcy.
Not the first time
Firstly, this is not the first time that the airline is in trouble. When the 2008 financial crisis hit, the still growing Indian Aviation market declined. Passenger numbers dropped and airlines were forced to either drop the prices, which they did at first or to raise them when fuel prices soared.
Jet Airways was not any different. The company did the same as everybody else and Indian passengers were on a price rollercoaster.
But Jet Airways had two more problems. The airline recently acquired Air Sahara, which cost a hefty sum of money.
Secondly, Low-cost carriers were starting to dominate India‘s skies. With the financial crisis impacting traveler numbers, Jet Airways did not make any decisions to soften the hit. Passengers started to prefer low-cost airlines like IndiGo because of their lower ticket prices and Jet Airways was in even more trouble. But the problem was, that Air Sahara was not a low-cost carrier. The airline ran the same business model as Jet, so essentially Jet Airways just paid a lot of money for additional aircraft, routes and parking slots.
Instead of trying to change the way the airline operates, the chairman of Jet Airways, Naresh Goyal told the world to hold his beer.
The company fired 1900 employees. Just like that. Sure, you could understand the move – the airline was in debt, it needed to reduce running costs to keep flying. However, instead of reducing operating costs, Jet Airways set themselves up for another crisis.
Employees of Jet Airways did not take the news well and went to the streets to protest the decision. After a few days of protests, Naresh Goyal caved in and re-hired the workers. Everything seemed okay for a while, at least in the Human Resource department. The airline was still losing money.
Jet Airways employee protest
But in 2009, Naresh Goyal asked the world to hold his glass once more.
No union for you
Jet Airways’ pilots formed a union called the National Aviators Guild. Two pilots from Jet Airways played a key role in the formation of the union.
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