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Aviation

Published on: March 12, 2021, 3:09 p.m.
Will Jet rise from the ashes like Phoenix?
  • Jet Airways hopes to resume services within a few months of clearance

By Yeshi Seli. Assistant Editor, Business India

Jet Airways expects to be airborne, as soon as its resolution plan is cleared by the National Company Law Tribunal (NCLT). Headed by the Jalan-Kalrock consortium, the airline hopes to resume services within a few months of the clearance. However, the consortium’s hope that Jet Airways’ earlier slots will be given to it automatically has nosedived. While the Ministry of Civil Aviation (MoCA) and Directorate General of Civil Aviation (DGCA) aren’t objecting to the resolution plan, they say that most of Jet Airways’ slots have been temporarily given away to other airlines. 

“The resolution applicant has to apply for slots and the approvals will be given accordingly,” inform MoCA and DGCA spokespersons. In this context, the NCLT’s Mumbai bench, chaired by Mohammad Ajmal and V. Nallasenapathy, has directed the MoCA and DGCA to file an affidavit regarding the slots. For Jet Airways to be fully operational, various approvals will be required, even after the resolution plan is approved. 

The consortium headed by Murari Lal Jalan, 56, chairman, Agio Image group, had won the bid for the airline in October 2020. Jalan and Kalrock, a London-based investment fund, had submitted a $138 million bid to relaunch the carrier, which was grounded in April 2019, under the Insolvency & Bankruptcy Code (IBC) procedure.

According to the resolution plan, approved by the committee of creditors, the Kalrock-Jalan consortium has committed to pay Rs1,183 crore over five years to the employees and financial creditors of Jet Airways. In addition, it has offered to buy 51 per cent of the Etihad Airways’ stake in Jet’s loyalty programme (Jet Privilege has been renamed Intermiles).

This would mean that the airline’s workmen and employees will get Rs113 crore (against a claim of Rs1,200 crore) within the first five months, while its financial creditor will get Rs1,010 crore over five years (against the claim of Rs1,200 crore). The employees are expected to get Rs11,000, while the workmen will get Rs10,200, some phones and stationery and free tickets worth Rs10,000 for travel. The consortium will pay the money through internal accruals,, sale of assets of Jet Airways and cash flow accrued, once the airline is airborne.

No rebranding

Jalan is optimistic that, once the NCLT gives a go-ahead, the consortium would take about six months to get the airline airborne again. Though they have no interest in rebranding the airline, they plan to shift the headquarters to Delhi NCR and see whether the approvals permit them to begin with passenger or cargo service first.

Jalan had earlier stated that they would use 25 new aircraft (a mix of wide bodied and small bodied) to begin the services and, while Delhi-Mumbai and other major metros would be connected, his intention is to link Tier II and Tier III cities too.

  • Corporate governance and leadership, together with strong balance sheets, will be the two critical pillars for the revival of the sector and must be accorded institutional priority, if foreseeable failures are to be avoided

Regarding Jet Airways’ existing fleet of aircraft – which has been grounded since 2019 – he felt their airworthiness has to be tested before flying them.

Jalan, who hails from Ranchi, had moved to Kolkata after completing his studies and worked there for a few years. In 1992, he moved to Tashkent and is quite fluent in Russian now. Though he moved to Dubai in 2000, he is often in Tashkent in work-related visits.

Jalan is optimistic that, by June this year, the air traffic would improve, once the anti-corona vaccination programme culminates. “The domestic air traffic is expected to be back to the pre-Covid-19 level by summer, with the traffic seeing a sharp recovery from July onwards, after the resumption of the services post Unlock 1.0,” says Hardeep Singh Puri, minister of state for civil aviation. “Contrary to what the prophets of doom and gloom say, we have not only been able to navigate the pandemic turbulence, but today, in terms of domestic civil aviation, we are almost at the pre-Covid-19 level,” Puri adds.

Meanwhile, “The government will have a significant and critical role to play in achieving optimal outcomes,” says the Centre for Asia Pacific Aviation’s (CAPA) brief precursor to the 2022 Annual Outlook. “Corporate governance and leadership, together with strong balance sheets, will be the two critical pillars for the revival of the sector and must be accorded institutional priority, if foreseeable failures are to be avoided.” 

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