Jet Airways, once the largest and most renowned airline in India, has officially been grounded by the Supreme Court, marking the definitive end to its five-year struggle for revival. The court’s ruling on Thursday concluded the airline’s tumultuous journey, sealing its fate under the Insolvency and Bankruptcy Code (IBC), effectively putting an end to all hopes of its revival.
For years, attempts to restore the carrier had been met with fierce legal disputes between the airline’s lenders and the Jalan KalRock Consortium (JKC), which was designated as the successful resolution applicant (SRA) in 2021. The JKC—comprising London-based Kalrock Capital and UAE businessman Murari Lal Jalan—was tasked with revitalizing the airline, but its efforts fell short, leading to accusations from lenders that it failed to inject necessary capital and meet its commitments.
The Supreme Court’s ruling came after a series of legal battles and disputes. The court allowed appeals by State Bank of India (SBI) led lenders, setting aside the NCLAT order allowing transfer of ownership to JKC. The court concluded that the resolution plan was unviable, citing JKC's failure to honor the terms of the agreement, and described its actions as "contravening" the resolution conditions.
At the heart of the controversy was a financial promise from JKC to pay Rs 4,783 crore and an initial Rs 350 crore infusion. The Supreme Court ruled that the transfer of ownership should not have been allowed, especially since JKC had sought to adjust the first tranche payment against a performance bank guarantee, which the court deemed “perverse” and in violation of its earlier order.
Founded in 1993 by Naresh Goyal, Jet Airways quickly rose to prominence after India’s liberalization allowed private airlines to operate scheduled services. Backed by Gulf Air and Kuwait Airways, the airline gained a competitive edge, becoming a strong rival to government-run carriers like Indian Airlines and Air India. Over time, Jet Airways expanded internationally, becoming a preferred airline for Indian travellers and winning accolades for its world-class service. By 2005, it had also raised capital through a successful IPO.
However, as the Indian aviation landscape began to change, Jet Airways found itself facing intense competition from low-cost carriers like Air Deccan, SpiceJet, and IndiGo, which started dominating the market. In 2007, Jet Airways made a costly move by acquiring Air Sahara for over Rs 2,200 crore, but this acquisition added financial pressure on the airline.
Increased costs, coupled with fierce competition, pushed Jet Airways further into the red. A surge in oil prices in 2008 and the global financial crisis worsened the situation, making international operations particularly unprofitable. By 2012, the airline was already struggling with mounting debts. The government’s foreign direct investment (FDI) policy change in 2013, allowing foreign airlines to own up to 49 per cent of an Indian carrier, brought in Abu Dhabi-based Etihad Airways, which acquired a 24 per cent stake in Jet Airways.
Despite this, Jet Airways continued to face challenges. Allegations of financial mismanagement and siphoning of funds emerged, and in 2019, after failing to secure emergency funds from a bank consortium, the airline suspended operations. Jet Airways was grounded in April 2019 after the SBI-led consortium of banks rejected its request for emergency fund infusion of Rs 400 crore to stay operational. Attempts by Goyal to get Etihad to increase its stake or bring in fresh investors, including talks with the Tata group, did not bear fruit.
At its peak, Jet Airways flew to over 65 destinations worldwide, including key hubs in Mumbai, Delhi, Bengaluru, Amsterdam, Paris, and London. It operated a fleet of 124 aircraft, serving nearly 1,000 routes before suspending its services.
Since its grounding, Goyal, along with several top officials of the airline, has been under scrutiny by various government agencies, including the CBI, Enforcement Directorate, and Income Tax Department, over allegations of financial fraud. An inspection by the Ministry of Corporate Affairs found irregularities including diversion of funds. These investigations further tarnished the once-stellar reputation of Jet Airways.
With the final ruling of liquidation, Jet Airways’ saga has come to a definitive close. The airline’s fall from grace is a poignant reminder of the volatility and challenges faced by India’s aviation industry, particularly in the face of rising competition, fluctuating fuel prices, and financial mismanagement.
