Jet Airways Crisis and its causes Explained

The Jet Airways crisis serves as a wake-up call for India’s aviation sector, and action needs to be made to turn airlines into profitable, long-term enterprises.

Due to a lack of funding, Jet Airways stated in April 2019 that it would temporarily cease all of its operations.

It owes Rs. 8,500 crores in debt. Therefore, banks are not at all prepared to provide the company with more funding.

Since January 2019, it hasn’t paid salaries to its staff members as well. Therefore, Jet Airways, which until recently was India’s second-largest airline, is currently experiencing a crisis.

A partnership led by SBI is looking for funding for Jet Airways. As a result of their abrupt unemployment, Jet Airways personnel are being hired by other airlines.

Since January 2019, salary and other obligations are still owing.

Causes of the crisis

As a full-service low-cost carrier, Jet Airways includes meals and other luxuries at the cost of a ticket. These low-cost carriers charge passengers for meals and supplemental services and operate on a low-cost business model. Jet Airways had to lower ticket costs to stay competitive. Jet Airways was losing money as a result. Every ticket sold has higher expenses than revenue when all operating expenses are taken into account. As a result, the debts grew over time.

We can blame poor management for the Jet Airways issue. This predicament could have been prevented if the business had taken the necessary efforts to become profitable. Additionally, high fuel prices are a factor in the aviation industry’s high operational expenses.

Way forward

The company can be successfully revived because, up until recently, Jet Airways was the second-largest airline in India, proving that it is not a failing enterprise. Simply said, this catastrophe was brought on by a few errors. As a result, Jet Airways can become profitable by making some changes. Additionally, the demand in the aviation industry is growing. So, there should be enough supply to keep up with it. Additionally, to control pricing, there must be competition.

Banks need to release money so that at least one month’s worth of wages for Jet Airways employees may be paid. Because stopping pending salaries is morally wrong. Additionally, keeping the workers requires making payments. Furthermore, unpaid invoices might discourage investors from buying the business.

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