When Jet Airways got grounded last April, it became the last of the private carriers that had begun operating in Indian skies after the sector had been opened up, to shut shop. Its peers — such as Damania Airways, East-West, ModiLuft, and Air Sahara — had already been sold or shut down by then.

There are many contrasts and similarities between these airlines and Jet. Before launching Jet Airways 28 years ago, its Chairman Naresh Goyal had operated a travel agency — a low-profile businessman not given to flamboyance. On the other hand, Parvez Damania owned a hatchery before launching Damania Airways in 1993. He ran his airline more like a five-star hotel, giving away freebies and serving liquor on domestic flights before this was banned.

Four years later, Damania sold off his airline to NEPC Airlines, a Chennai-based company which manufactured windmills. This airline, too, folded months after it bought Damania Airways.

Dalliance with Mallya

Similarly, others airlines, such as East-West, also shut shop while Goyal ran a steady ship with the help of his trusted lieutenant Saroj Datta. This was until he engaged with Vijay Mallya, who had just launched Kingfisher Airlines, for a takeover bid for Air Sahara.

Air Sahara was finally bought by Jet in 2007 but those who watched the takeover bid unfold claim that Mallya led Goyal down the garden path and left him to nurse back an airline which was broken from the start.

Air Sahara hung around Jet’s neck like an albatross, bleeding the company year after year. More of the row between Goyal and Mallya was to come later.

Subsequently, Goyal returned the favour after he managed to whisk away Etihad as a funding partner as Mallya watched helplessly. Etihad Airways bought a 24 per cent stake in Jet for around $380 million, allowing Goyal some breathing space.

Mallya needed that money badly to rebuild his airline after he had poured nearly ₹1,000 crore to buy Air Deccan in 2007, pledged his shares in his profit-making liquor businesses to raise money to run the airline, and received a one-time favour from the government to reschedule his loans. He still was unable to manage the airline’s spiralling losses.

Where Kingfisher erred

It might seem that the career paths of Mallya and Goyal ran on a similar trajectory but they were vastly different, too. Mallya had no roadmap to run Kingfisher Airlines. He launched services on routes which were unprofitable, loaded his passengers with goodies and committed the same mistake as Damania.

For all purposes, Kingfisher was a five-star hotel on air. Its decision to buy low-cost carrier Air Deccan when its own business model was that of a full-service carrier was an absolute blunder. Similarly, many attribute Jet’s downfall to its buying out low cost carrier Air Sahara when its image was that of a full-service carrier.

Mallya did a reverse merger of the two airlines so that Kingfisher could start flying international routes immediately. He launched services to the US and UK, taking on biggies like British Airways and some of the American carriers. Within a month, its global rivals squeezed Kingfisher out of the race.

In Jet’s case, it was more of a case of an airline whose business model had run its course.

Jet’s folly

Jet would have had to play out of its skin to maintain its operations and perhaps reset itself but a bleeding entity can only go so far. In a note to its investors, analysts from ICICI Securities had warned a year before the suspension of the airline’s services that the cost of operating Jet Airways remained one of the highest in the industry.

“Given the continuous rise in crude oil prices along with a weakening rupee, the operating environment would continue to remain challenging for the company, going forward. Hence, we drop coverage on the company,” Rashesh Shah and Devang Bhatt wrote in the note. A year later, their warning came true. In April 2019, various lenders of Jet Airways, which was by then weighed down with a debt of $1.2 billion, decided to refer the company to the NCLT for bankruptcy proceedings.