Debt trouble: All Jet Airways needed to avert this tailspin was a rupee

Jet Airways – India’s longest-surviving private airline now needs bankers with spine to keep flying.


All Jet Airways India Ltd. ever needed was 1 rupee, or just 1.4 U.S. cents, for providing hot meals and cold towels.

Since even that modest goal has proven elusive, India’s longest-surviving private airline now needs bankers with spine to keep flying.

It’s been clear for some time that Jet, falling behind even on pilots’ wages, was going to skip a debt payment soon. Now that a default on bank loans has finally happened, let’s spend a minute on the brutal economics of the missing rupee.

As a full-service carrier, India’s second-largest airline spends that much more per available seat kilometer than its bigger rival, IndiGo. That’s excluding fuel costs, which are volatile and exorbitantly taxed but comparable for all players.

The problem is that as 2015 was ending, Jet was earning only half a rupee more in revenue per seat kilometer than IndiGo. That was just before InterGlobe Aviation Ltd., the owner of IndiGo, set out to expand its scale of operations 2.5 times faster than what Jet could muster.(1) The market leader also drove prices lower by forgoing revenue of 0.9 rupees per kilometer over the first nine months of 2016.

Jet was too indebted to match its rival’s aggression. When it tried, by sacrificing revenue of 0.3 rupees per kilometer, it ended up charging customers less than it cost to fly them. Then, starting September 2017, oil prices shot up for a year. The whole industry was shaken, but Jet had already keeled over.

The fuel-price surge has now receded, and the airline is exploring cost-cutting options. But saving $100 million a year on maintenance contracts won’t make the debt problem disappear: Repayments of as much as 63 billion rupees ($900 million) are due by March 2021. Of its fleet of 124 at the end of September, Jet owns only 16 planes that can be sold.

Lengthening the working-capital cycle has its limits. Lessors have to be paid lest they take the aircraft away; employees have families to feed. A plan to monetize the airline’s privilege program hasn’t gone anywhere. Who’ll buy into Jet Privilege Pvt. when there are doubts about the carrier’s future? Speculation that the Tata Group could be a white knight has also waned. Nor is it clear if Etihad Airways PJSC — which must now regret picking up its 24 percent stake five years ago — would want to back Jet founder Naresh Goyal, the 51 percent owner, once again. The aviation market in the Middle East isn’t exactly brimming with optimism.

There are probably only a handful of good options now. Either Etihad doubles down by making a fresh investment; or the board finds a new owner who infuses equity by diluting Goyal and Etihad. To succeed, both these approaches would need the real threat of banks referring Jet to the bankruptcy tribunal. Goyal would lose control of the airline involuntarily, yet the carrier would continue to operate with fresh super-priority funding (which will rank higher than existing debt).

Business Standard

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Govt launches chatbot loaded AirSewa digital platform for air passengers

AirSewa 2.0, the upgraded version of the web portal and mobile app, provides chatbot support for a faster resolution and personalised traveller experience.


Chatbots will now help air travellers in addressing their grievances, as the government Monday launched an upgraded version of AirSewa digital platform.

Besides, passengers can have access to real-time flight status and schedule for both domestic and international flights, according to the Civil Aviation Ministry.

AirSewa 2.0, the upgraded version of the web portal and mobile app, provides chatbot support for a faster resolution and personalised traveller experience. Also, passengers can sign up using their Facebook and Google accounts.

Generally, chatbots are computer programmes that interact with people through audio or text messages.

The AirSewa portal and mobile app were launched in November 2016. Since the launch, AirSewa 1.0 has helped resolve a significant number of air passenger concerns, as per the ministry.

Civil Aviation Minister Suresh Prabhu formally launched the upgraded version of AirSewa in New Delhi.

Around 12,000 complaints have been dealt with through AirSewa, Minister of State for Civil Aviation Jayant Sinha said.

“It is very very scalable and artificial intelligence (AI)-driven,” he noted.

India is one of the fastest-growing aviation markets in the world.

The ministry also said that AirSewa would help the government capture air travellers’ feedback for policy interventions.

Business Standard


Runway repairs: 100 flights cancelled at IGIA, fares up 100% on some routes

The fare of one-way tickets from Delhi shot up to almost Rs 30,000.


Just as passengers were dealing with delays and disruptions at Delhi’s Indira Gandhi International Airport due to repairs on one of the three runways since yesterday, November 15, they were hit with dearer spot airfares in and out of Delhi. Adding to the woes, about 100 daily flights have also been cancelled for the next eight days, according to The Times of India report.

As seen on various travel apps and websites, the fare of one-way tickets from Delhi shot up to almost Rs 30,000. For example, the Delhi-Mumbai flight airfares showed high airfares ranging from Rs 15,000 to Rs 29,000 on travel portals.

November 16 flight fares from Delhi

Mumbai- Rs 9,427 – Rs 28,974

Kolkata- Rs 11,401 – Rs 31,425

Chennai – Rs 8,303 – Rs 28,712

Bengaluru – Rs 17,752 – Rs 29,447

Hyderabad – Rs 9,773 – Rs 21,870


Spot fares in some sectors have gone up by up to 100 per cent as it is weekend and the inventory of lower advance purchase-priced tickets has been sold out. What is available for spot sale is the higher category fares. With close to 100 flights less per day when the runway will be shut (Nov 16-23), the demand-supply mismatch has added to higher fares,” A Kalsi of Delhi’s Ambe Travels told TOI.

One of IGIA’s runways will be closed for repairs for 13 days starting Thursday, according to a communication. The airport, operated by DIAL, is the busiest aerodrome in the country. Runway 27/09 would be closed for “preventive repairs” next month while two other runways — 11/29 and 10/28 — would be operational.

The airport handled 63.5 million passengers in 2017-18. The airport has around 1,300 flight movements every day.

In a statement, DIAL said it was planning the closure of runway 27/09 to carry out preventive repairs.

“The works are scheduled to be undertaken for 13-day duration starting from November 15, 2018. This will lower the capacity of IGI Airport by 50 arrivals and 50 departures per day in this duration,” a DIAL spokesperson said.

The spokesperson also said these works are essential for safe aircraft operations and to avoid sudden disruptions that cause greater impact due to the time required for planning the logistics.

Business Standard