On May 15 and 16, the newly revived Jet Airways conducted its first proving flights, albeit with old aircraft, successfully, in anticipation of receiving its air operator's permit (AOP) - the final hurdle to be cleared before it takes off. A few days later on May 19, the airline was granted the much awaited AOP.

The journey to this stage of the revival process has been far from easy for the team that is seeking to resuscitate India's much loved private airline that downed its shutters in April 2019. After a lengthy search for new investors, the Jalan-Kalrock consortium's bid was selected by creditors in October 2020. A court panel approved Jet's takeover and restart plan in June 2021. Through 2021, the process of revival moved very slowly and Ministry of Civil Aviation (MOCA) officials and the sector observers were not convinced the airline would take off at all. Towards the end of the year, at least two former Jet senior employees - Sudhir Gaur and finance expert M. Shivkumar - who had been closely involved with the revival resigned and exited.

In 2022, however, things moved at a faster pace. Although industry remains unsure of the source of funds, many things happened. To begin with, the airline in April onboarded a new CEO - Sanjiv Kapoor - who was with SpiceJet and Vistara before he joined the hospitality sector. In addition, an airline spokesperson said that Vipula Gunatilleka has joined as CFO, Capt. PP Singh as Accountable Manager, Alphonso Dass as VP – Operations, Nakul Tuteja as VP - HR & Administration. The management team also includes senior executives from erstwhile Jet Airways, such as Capt. Vishesh Oberoi (Director – Flight Operations), and Capt. Niraj Chandan (Director – Flight Safety). There are currently over 200 employees in total including some pilots and crew. Sources involved and who have been associated in various capacities with the revival say that those in charge have made a sincere attempt to build a strong and credible team.

At the ministry level, there is now support for the revival plan since it looks good if there is a revival of a much-loved brand during their reign. "Although MOCA doesn't have any real skin in the game, they are keen that such a revival takes place as it adds a feather to their cap and looks good on paper," says a senior government official involved with the process. For a government preoccupied with optics, Jet making a comeback would be welcome, regardless.

Fundamental Errors Post April 2019

Those associated with the revival process say many mistakes have been made right from the word go. For one, they argue that almost ₹3,000-4,000 crore could have still been recovered if Jet's aircraft and other assets had been monetised in 2019 itself. "Jet in May 2019 had four B777s and these could have been sold back then almost right away and good money recovered but this didn't happen," said a source. Now, after almost three years, the 11-odd aircraft that are left have not only depreciated in value significantly but also totted up parking and other charges lying unutilised at airports. In the time being, due to the pandemic, the market for aircraft has also taken a full circle. A source associated with the revival argues that even before the successful bidder was chosen, those involved with the process "squandered away a good opportunity to monetise the assets in the best manner possible".

Such handling of the situation has allegedly been across the board and not just with aircraft but other Jet assets too. Sources say that NCLT, bankers involved - SBI in particular - and those involved in the revival process have "mismanaged" the affairs of the airline although they may have been well intentioned. "Lack of understanding of the aviation business and general lack of competence have led to a situation where the revival has become even more untenable or at least more difficult than it should have been," says a source who distanced himself from the process once he felt it wasn't going the way he had envisaged. A Jet spokesperson declined to comment on the matter, terming it speculation.

Many sources close to the winning bidders and the Jet revival team say that they have placed an excessive focus on getting the AOP and not enough on the rest of the formalities and procedures that need to be fulfilled before it flies. "As I see it, things must proceed together. The AOP cannot be the be-all and end-all," says a source familiar with the plan. He says that one must work out the product on offer, routes to be flown, slots and frequencies, which reservation system will be adopted, the aircraft details and training manuals and systems all simultaneously and not wait for AOP before getting going. He argues that the consortium members (Jalan and Co.) are very "raw, unfamiliar with the aviation business" and this lack of experience is why he is unconvinced that the airline will sustain operations, even if it does get going. Moreover, he doesn't expect the airline to fly before the year ends even if everything eventually falls in place. This, many argue, is one of the reasons that senior ex-Jet management including M. Shivkumar and Sudhir Gaur eventually resigned. Things were not proceeding either at the speed they would have liked or with a logical sequence.

The Million Dollar Question

As the months of 2022 have gone by, many are of the view that Jet is likely to restart and take to the skies. But the million dollar question they ask is: will it sustain and grow? Most sources spoken to for this article are far more skeptical about this aspect.

There are a few reasons for this. As per the resolution plan approved by the NCLT, the consortium led by Murari Lal Jalan is committed to a funding of $180 million into Jet Airways. Of this, about $60 million will be used to settle liabilities of Jet 1.0, and the remaining $120 million will be used to fund the restart of the airline. This initial investment excludes any income from sale-and-lease-back (SLBs) and income from the sale of company assets. The shareholding pattern is as per the resolution plan approved by the NCLT – the banks will own 10%, and the remainder 90% by the consortium. No debt has been raised so far. But as far as could be ascertained, this money is yet to come in.

Further, sources are not certain what claims the revived airline might face in the future. The spokesperson for the airline, however, says the consortium has undergone two liquidation proceedings abroad – in the UK and in the Netherlands (covering the EU region), where it confirms that there are no dues now. "We will review any other claims of overseas vendors and foreign airports as and when we expand in the international market," says a spokesperson in response to a detailed mail.

But what perhaps is the most critical question is the fact that even at this late stage there is no clarity on critical aspects including which aircraft the airline will induct. "I am unable to understand how the airline can claim that it will launch in the coming quarter - July to September but it is still unclear about which aircraft it will be using. Even to lease planes from the secondary market, there is a lead time involved," says a DGCA source. "This seems rather odd. Mostly, when one is starting an airline, one of the first things one decides upon is the aircraft," says an ex-Jet senior management official.

In response to a question on this, Jet Airways says: "We are in final negotiations with the aircraft OEMs, and will announce our aircraft choice once we make a decision. This is one of the most critical decisions that is made by airlines, and is not one that is rushed."

The company, however, maintains that in a reply sent on April 15: "Our AOC application is based on Boeing 737-800NG aircraft that Jet Airways used to fly. We are in talks with all the major aircraft manufacturers as well as lessors, studying all options available. We want to be fully aware of all available products and the possibilities we can achieve with each of them. We will soon take a call on the kind of aircraft that aligns with our long-term plans, and announce the decision in due course. The decision we make will be for the long term, we do not want short-term availability to impact long term strategy". He refused to give any details on the number or schedule for induction. "It may suffice to say, aviation is a scale-driven business and we are not doing this to remain a small or a marginal airline; we intend to have a meaningful sized fleet by the end of next year. We will grow to scale at a speed that we can absorb and the industry can absorb in terms of slots availability, our capability, people recruitment, etc," the spokesperson adds.

What is worrying bankers and others involved with the revival even more is whether the infusion of funds is proceeding as per plan and as per the requirements stated in the resolution plan.

Image : Amit Sharma

The deadline of 180 days has been missed and an extension of two months has been granted but as of now nobody is aware of the details of how much money has come in from the successful bidder's end. "This is the single biggest worry and hurdle. Does the consortium have the money and does it intend to keep to the plan is not very clear even now," says one source who is associated with the revival. A source says the consortium had infused some funds which were being used for payment of salaries and other expenses like the proving flights and maintenance checks but the rest was still "work in progress". The company spokesperson refused to divulge the details and amount, saying that there is a degree of confidentiality required to be maintained.

Behind The Scenes

This "lackadaisical and unstructured" approach to the revival has led many to question the intent and sincerity of the proposed plan altogether. Two theories have been doing the rounds ever since the revival plan started gaining traction. One, many are of the view that the Jalan Kalrock combine allegedly represents the erstwhile founder Naresh Goyal who is still vested in his "baby", his old airline, a charge the combine flatly denies. A second theory that has been doing the rounds but remains in the nature of conjecture is that certain big investors in the airline have been stuck with large holdings of the Jet stock, which has plummeted to ₹100 and even lower from highs of ₹1,100-1,300. Many believe it is to buttress the stock price to some kind of respectable level and recoup some of the losses that the revival theory is being kept alive in the public eye and mind. Both these theories remain in the realm of speculation but privately several top officials of MOCA and DGCA, many industry watchers, observers and veterans and almost all the rival airlines are actively watching the developments for cues.

Those still vested in the revival and convinced of its authenticity, however, argue that the airline will get going during the July-September 2022 time frame, that Jet airways is here to stay and to regain its old glory as one of the country's premier airlines. Which of the two sides proves right as Jet 2.0 approaches the runway remains shrouded in mystery for now: Jet, Set and Go or Jet, Set and…. Sputter.

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