The Modi government won’t bail out India’s oldest private airline

Survival strategies.
Survival strategies.
Image: Reuters/Adnan Abidi
We may earn a commission from links on this page.

The Indian government won’t bail out embattled Jet Airways, the country’s second-largest airline by market share.

Civil aviation minister Suresh Prabhu said yesterday (Nov. 19) that in the current deregulated policy environment, the government’s job is only to look at sector-specific problems, firmly putting the onus of Jet’s smooth functioning on the airline’s own management and its policies.

“For a private airline, it is for the airline’s board of directors, (and) their management to make sure that the airline functions properly and they have to take appropriate measures depending upon market conditions that will prevail from time to time,” Prabhu said, speaking at a function in New Delhi.

The government has also decided to steer clear of intervening in Jet’s request for more time to settle its dues to airport operators. “We don’t get into commercial discussions between airlines and airport operators. It is to be done commercially between the two entities,” civil aviation secretary RN Choubey said at the same event.

Denying financial help to Jet comes at a time when the cash-strapped airline is desperately trying to find a buyer.

The airline is reportedly in talks with the salt-to-software conglomerate Tata Group for a possible buyout. After initially refusing to comment on merger talks, on Nov. 16, Tata Sons confirmed that it was discussing a possible buyout of Jet Airways. “… We would like to clarify that any such discussions have been preliminary and no proposal has been made,” a Tata Sons spokesperson had said.

Jet posted its third consecutive quarterly loss on Nov. 12 and has been under pressure to service its huge pile of debt, which, as of June this year, stood at Rs8,620 crore ($1.18 billion). The company’s efforts at cutting down costs seem to have yielded no results yet.

The Indian aviation sector, in general, is in the doldrums as it tries to overcome the blows from rising oil prices and a weakening rupee. Even IndiGo, India’s largest airline, reported a loss in the quarter ended September.

The government, on its part, has been infusing money into India’s national carrier Air India to help it avoid defaulting on interest and salary payments, particularly since its divestment plans failed to take off in June.

On Nov. 19, however, the government clarified the need for Air India to exercise caution. “Without checks and balances, no money would be given to them. Efficiency and improvement, which Air India has to ensure, are being monitored,” Choubey said at the event.