Downfall of India's Largest Commercial Passenger Airline | Kairos Institute

Downfall of India's Largest Commercial Passenger Airline

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Jet Airways (India) Ltd. is an Indian international airline based in Mumbai, India. Jet Airways was the largest commercial passenger airline in India. The airline suspended its operations on 17th April 2019. The airline is going through insolvency proceedings.


Here is a look at major 5 possible reasons for the downfall of Jet Airways.


Costly purchase

The purchase of Air Sahara for $500 million, tracked back to 2006 by Jet Airways is believed by aviation experts to be the start of financial troubles for Jet Airways.

Budget airlines

The start of new budget airline like Indigo, Spicejet and Goair made the aviation sector highly competitive and the low-cost airlines were highly successful which was a big blow for Jet Airways. As per experts Jet did not take the competitors seriously. Jet always concentrated on the corporates and failed to recognise that low cost carriers were highly attracting price sensitive customers as per industry experts.

Poor management

Experts also say that the style of managing was not the best. The decision to have single management team running all Jet’s operations as per experts was a mistake. Instead they should have had one team managing the full-service carrier and another to manage the budget airline. It is said by some that Jet lacked a concrete business model and also kept changing it quite often which confused investors and passengers alike. Experts also say that the company made bad investments and failed to address financial issues in advance and kept borrowing heavily. It other words, the company spent more than they earned and kept borrowing.

Fluctuating crude

Economic experts say that all carriers in India are sensitive to fluctuations in global crude prices. The rupee was weak over the past year or so. Fuel, the biggest cost burden for airlines, becomes more expensive. oil cost going high and rupee value decreasing effected all carriers, But carriers like Indigo and Spicejet planned well to overcome this. Jet failed to cope up with this situation as well.

Failure to attract investors

Aviation analysts say Jet's failure to find a strategic investor to pump money into Jet extended the airline's losses. Talks at the end of last year with Tata also failed. At the same time Etihad Airways reportedly refused to increase its stake. AS part of a debt resolution deal that saw a consortium of lenders led by the State Bank of India take over the airline. It is now up to them to find a buyer. If they don't then Jet is likely to become the first Indian airline to collapse since Kingfisher Airlines ceased operations in 2012.

Due to the airline stopping operations, a lot of people lost their Airport Jobs. Also this made an impact on job aspirants looking forward for airport jobs as the people who lost the airport jobs were already in the market. This article is compiled by Kairos Institute with references from different places. Kairos institute is one of the leading Aviation and Logistics Institutes in Kerala.

   2019-10-27 02:31:48
   Kairos Institute

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