JET Airways is down, and probably out. Indeed, the darling of advocates of liberalisation, which only last year celebrated its 25th anniversary, has been brought down to the ground due to the weight of a billion-dollar debt and unwillingness of the lenders to advance more money. The harried passengers, besides the suddenly jobless staff, are naturally demanding intervention of the government to keep the airline afloat.
The bankers are now displaying reluctance to advance any more money to an airline that owes them Rs 8,500 crore. There is yet no credible explanation regarding how the debt was allowed to pile up to this unviable level in the first place. Why was corrective action not taken in time? The warning signs were there for all to see as once the poster child of liberalisation and the country's biggest airline by market value struggled. This is the second time cash crunch has brought air operations to a halt. Kingfisher Airlines suffered the ignominy in 2012. The crash-landing of two major airlines in what is considered the fastest-growing aviation market in the world points to systemic flaws. Air India, too, flies because of the government lifeline, and out of all the airlines operating, only IndiGo has shown profits.
While the government may like to maintain a hands-off approach, especially during the election season, it needs to step in and try to stabilise the sector. The double-digit growth rate of air passengers only underlines the increasing demand and need for air travel. The government and the lenders, who are led by the State Bank of India, have a duty towards the public to explain how things went so wrong. Even now, the logic of not advancing money that would have allowed the flight operations to continue is not clear. As a consequence, the valuation of the company has been significantly impacted. Even as belated financial scrutiny would shape Jet's future, airlines need to fly, and be viable business entities, so that passengers can fly in friendly skies again.
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