The Jet Airways meltdown has been like a slow-motion car crash that has suddenly sped up. But what next for the airline and its founder Naresh Goyal?

Many years ago when Air Deccan had just started its services, this columnist met GR Gopinath, founder of India’s first low-cost carrier, in a south Delhi guesthouse. Gopinath is a man who is never shy to speak his mind. He made it very clear during my meet that his plans were being held up by Naresh Goyal, the founder chairman of Jet Airways. He called Goyal the best connected person in the Indian aviation sector and swore that Air Deccan would still manage to soar.

In fact, Gopinath reiterated these allegations in a column for The Economic Times last week as the Jet Airways crisis reached its end-game. This is not for the first time that Jet Airways is faced with an existential crisis. This could, however, be the first time that Goyal and his airline will not survive unscathed with the airlines’ very existence in doubt.

This was certainly not how Goyal or Jet Airways employees had thought their silver Jubilee year would come to an end. After all, the airline faced it all — change in ownership, regulations, Governments and even rivals — and survived everything. Jet is the only airline from the mid-1990s aviation boom — when the Government opened domestic services to private carriers — to have survived. This despite an almost public humiliation by Vijay Mallya when the bombastic businessman spoke of a potential Jet-Kingfisher merger after Jet laid off thousands of cabin crew amidst a payments crisis. Goyal and Mallya had a famous late night press conference where the latter almost lorded over the former.

Yet, the reticent and media-shy Goyal had the last laugh when Mallya came crashing down to earth harder than Icarus. But his battle with Mallya is what doomed both men as they went for ill-advised decisions to buy Air Sahara (Goyal) and Air Deccan (Mallya). These financially profligate decisions destroyed the finances of both the companies.

A decade after buying Air Sahara, Jet Airways was unable to fully integrate the airline into its operations, not for any fault of its own but the way the airline industry is regulated in our country. But as Mallya and Goyal fought, new entrants to the Indian aviation market, particularly Indigo, that flooded the market with capacity and lower fares, was what sounded the death knell for Kingfisher at first and also likely doomed Jet Airways into a long, slow decline.

One white knight that Jet Airways found was the Abu Dhabi-based airline, Etihad. Early in 2014, Etihad pumped in money into Jet Airways and made the Indian airline part of an ambitious global alliance of airlines that included the German carrier, Air Berlin;  Italian national carrier, Alitalia; Serbian national airline JAT; and some other small airlines across the world. This was all part of a scheme to build traffic through its hub in Abu Dhabi to compete with the Dubai-based Emirates airline in a seeming clash of egos.

Since then though, Etihad has bled money and has shuttered many of its routes. It  refused to sink more money in Air Berlin, which went bust last year and surrendered its stake in Alitalia that is currently on life-support in not a very different situation to Jet Airways. With Etihad’s losses totalling over $4 billion, there has even been murmurs that the airline will merge with Emirates.

That said, Etihad did initially express a desire to take control of Jet Airways, or as much as the Government’s Foreign Direct Investment rules would allow. But Etihad demanded that Naresh Goyal step down from the board of the airline and cut his stake down to under a quarter in perpetuity. On that front, they were little different from the Indian banks, which have a major exposure to the airline, and who demanded the same: For Jet to survive, Goyal must go. Finally, he did.

Jet has been unable to pay its staff or even the leasing companies from whom it borrows planes. Over the past few years, Jet has been gradually selling its planes to these leasing companies before renting them back. This allowed them to generate a certain amount of cash upfront. But now, with little money in the back and no rescue plan, the airline has failed to make payments and barely 35 aircraft out of a fleet of over 140 are at one-time fly. This means that over a million seats have suddenly disappeared from the Indian market in less than a month with cancellations rife.

So, while the Jet Airways crisis did not impact the passengers in the past other than the occasional withdrawal of lounge access and the end of free meals on board, the spate of cancellations has meant that commuters are directly impacted with refunds being held up. Worse still, several travellers, who booked their travel on low, cheap fares several months in advance, find that even with refunds they will be stuck with expensive last-minute fares today.

With many travellers also having paid for hotels and other trip features in advance — and other airlines refusing to accept Jet Airways tickets, and in some cases being unable to cancel their tickets due to egregious fees — they are in a lose-lose situation.

So, should the Government and lenders step in? After having lost billions of dollars during the collapse of Kingfisher Airlines and learning that a grounded airline is worthless, the banks want to protect some amount of their money to find a suitable buyer for Jet Airways, which is what the provisional resolution plan suggested by the banks want.

But can the banks find a proper professional to run the airline? With Jet’s pilots refusing to fly until their dues are cleared, with salaries not having been paid for months, even with Goyal’s departure, the sun, which features prominently on Jet Airways’ tail logo, is not shining brightly.

However, it remains a great asset. With air travel booming in India and airlines such as IndiGo suffering severe growth pangs, Jet Airways still has potential. The banks must be wary of what to do next but they should be willing to take a haircut on their loans because if they do not, the airline might never recover and the Indian taxpayer will end up holding the can for the airline industry once again, just like they did for Kingfisher Airlines and continue to do with Air India.

The bottom-line is that Jet Airways must survive for the healthy growth of the aviation sector in our country and as a corollary, the Indian economy.

(The writer is Managing Director, The Pioneer)