The rise and fall of India's second largest carrier – what went wrong at Jet Airways?

Hugh Morris
Only a handful of Jet Airways' fleet is currently in service - istock

Barely six months after the high-profile launch of Manchester’s first direct route to India, the popular service to Mumbai was halted.

Jet Airways, the Indian carrier behind the flights, said the suspension was temporary and that the connection will be up and running again by May, but the crisis consuming India’s second largest airline casts serious doubt on that promise.

The beleaguered carrier - India’s oldest private operator - cancelled the majority of its international flights on Friday, including three services from London Heathrow, and is reportedly operating only 14 of its 119-strong fleet due to non-payment of rental fees. At the time of writing, according to FlightRadar24, only five of its planes are in the air. 

The Mumbai-based airline is nursing more than 1$billion (£765m) of debt and is desperately seeking a financial lifeline to stay in existence.

India’s aviation minister, Suresh Prabhu, said his ministry would “review issues” related to the airline and “take necessary steps to minimise passenger inconvenience and ensure their safety”.

Information on the Jet Airways website suggests that flights could resume over the weekend, but the airline appears to be teetering on the brink, leaving holidaymakers with their travel plans in tatters.

Passengers affected have been told to contact Jet Airways, but callers to the UK customer service line are greeted by an engaged tone. Virgin Atlantic, which operates a codeshare with Jet Airways, said passengers could rebook, reroute or refund their tickets

Manchester to Mumbai, pictured, is pencilled in for a May return Credit: istock

What went wrong at Jet Airways?

The dire situation at Jet Airways has been brewing for some time but is now coming to a head.

In the Nineties and 2000s, the airline was a standard bearer for Indian aviation. It was one of the first private carriers to form after India liberalised its economy and at its peak was running 600 domestic and 380 international routes.

So what has gone wrong inside a carrier that has seen, over the last nine years, its passenger numbers more than double to 27.2 million, its fleet grow, its load factor increase and its revenue swell?

In the rawest terms, Jet Airways has registered vast losses in seven of the years since 2010.

“[India] is a very challenging environment and so airlines struggle for profitability,” said John Strickland, director of independent air transport consultancy JLS Consulting. “There’s a lot of competition for traffic in and out of India. There’s Air India - that struggles on - and there is competition from the gulf carriers.

“We’ve seen low-cost carriers developing in India, too, European carriers taking traffic, Asian carriers. Certainly the competition is tough and it’s predominantly a price-led market.”

Indeed, the largest airline in India is budget outfit IndiGo, which can boast around 39 per cent market share and flies to dozens of domestic, south-east Asian and Middle Eastern destinations, while international passengers are as likely to fly to the subcontinent on their own carrier - British Airways or Virgin Atlantic, for example - as they are an Indian airline.

Add high fuel costs to the equation, thanks in part to government taxes, and India becomes a very difficult place for an airline to succeed.

The travails are in spite of the region being one of the fastest-growing in terms of passenger numbers. According to the International Air Transport Association (IATA), air travel demand is set to treble by 2037, with 500 million people flying to, from or within India. But in a report last year, Iata said: “The financial struggles of India’s airline industry put the stable development of connectivity at risk.”

IndiGo is India's largest airline Credit: istock

Unfortunately for the likes of Jet Airways and Air India - which is still state owned - the huge growth of passenger numbers in India has been fuel to the fire for low-cost airlines. A report last year produced by Routes Online found budget carrier GoAir to be the world’s fastest growing airline, increasing its capacity for the first quarter of 2018 by nearly a third, from bases in Mumbai, Delhi, Bangalore, Kolkata and Kochi. IndiGo was in ninth, growing 19 per cent.

Another study across 2015 and 2016 showed IndiGo to be the fastest growing carrier in the world, increasing its capacity by 27 per cent in 12 months. Last year, it announced a record profit of $348million.

The vast and growing market in India was one of the attractions that drew Etihad into investing in Jet Airways, today owning a 24 per cent stake.

As Jet Airways searches frantically for a solution to its problems, the UK Civil Aviation Authority has said it is monitoring the situation and published a link to make passengers aware of their rights.

“We are aware that Jet Airways has suspended international flights today,” the CAA said.

“If you have booked directly with Jet Airways contact the airline for further information. If you have booked with a travel agent, contact your agent for support.”

Though flights may resume over the weekend and beyond, with the airline owing money to employees and suppliers, the majority of its fleet grounded, and services already cancelled, many are expecting the carrier to fold altogether. Should that happen it would be the seventh to do so this year.