Jet Airways, once the poster boy of a rapidly growing Indian aviation industry, finds itself on the brink of collapse. The finger points to the same Indian government which is now trying to rescue the airline.
Jet Airways, India’s oldest private airline, grounded all of its operations on Wednesday after it failed to secure emergency funding from state-backed lenders, who took control of the company last month as part of a rare move by the Indian government to rescue a private company.
DW reports that the company, which was until recently the country’s second-largest airline by market share, had already suspended all international flights and was operating fewer than 10 aircraft. It has not paid its senior staff, including pilots and engineers, since December.
The carrier, saddled with roughly $1.2 billion (€1.06 billion) of bank debt, has been struggling for more than a decade to remain afloat in the face of competition from a host of budget airlines. The airline was pinched further last year when Prime Minister Narendra Modi’s government slapped a 5% import duty on jet fuel — that accounts for about a third of the carrier’s costs — even as oil prices rose globally and the rupee fell to record lows.
“Which government imposes import duty on jet fuel when oil prices are going up,” said Mark Martin, chief executive of New Delhi-based aviation consultancy Martin Consulting. “That’s what I have got a problem with.”
Martin blames the ruling government’s policies as one of the three main reasons behind Jet Airways’ current plight. Competition from budget carriers and bad corporate decisions are the other two.
“Costs went up 18% as a result of the Goods and Services Tax introduced by the government,” Martin told DW. “And the government did nothing to soften the blow to an industry already struggling to stay afloat.
Jet Airways — a full-service airline — was also hurt by the Modi government’s 2016 decision to recall 86% of cash in circulation.