Mumbai/New Delhi: In more trouble for cash-strapped Jet Airways, an umbrella body of its domestic pilots Tuesday threatened to stop flying from April 1 if their dues are not paid by March-end even as aviation regulator DGCA said only 41 aircraft of the airline were in operation.
As situation at the beleaguered airline deteriorated, Civil Aviation Minister Suresh Prabhu directed senior officials of his ministry to continuously monitor developments relating to the crisis.
In a related development, the Jet Airways' Aircraft Maintenance Engineers' Union wrote to the DGCA on Tuesday morning saying they were not paid salaries for last three months and that their "adverse psychological" condition has put flight safety at risk.
However, they issued a clarification hours later saying Jet Airways aircraft are safe to fly and are being maintained at highest levels of safety standards.
Terming the situation at the airline "dynamic", the Directorate General of Civil Aviation (DGCA) said only 41 aircraft of the Jet Airways were currently available for operation and there may be "further attrition" of flights "in coming weeks",
As per the website of Jet Airways, it has a fleet of 119 aircraft in total. For the past few weeks, passengers have been venting their ire on social media as the airline's flight cancellations have increased.
A senior official of DGCA said the regulator is reviewing the hike in airfare on specific routes across the country and it has advised airlines to increase flights so that the fares remain in check.
The DGCA held a meeting on Tuesday to discuss the upward spiral in airfares owing to Jet continuing to ground more aircraft while cancelling a significant number of its flights.
Pilots threaten strike
In Mumbai, National Aviators Guild, a body representing around 1,000 domestic pilots of the airline, in its annual meeting warned the management of the Jet Airways that they will stop flying from April 1 if their pending salaries are not paid by end of this month.
They also demanded implementation of the "resolution plan" to resolve financial issues of the airline. The plan was announced few weeks ago.
The pilots and other senior staff of the airline have not been getting their full salaries since December.
After the DGCA took stock of the situation at Jet Airways, its spokesperson said the regulator reviewed the performance of the airline on operational, airworthiness and passenger facilitation.
The spokesperson added that the DGCA has instructed the airline to comply with "the relevant provisions of the applicable CARs (Civil Aviation Requirements) for facilitation of passengers regarding timely communication, compensation, refunds and providing alternate flights wherever applicable".
Jet Airways has a debt of over Rs 8,200 crore and needs to make repayments of up to Rs 1,700 crore by the end of March.
On March 8, Jet Airways chairman Naresh Goyal wrote to Etihad Airways Group CEO Tony Douglas seeking an urgent funding of Rs 750 crore and also warned that any delay in fund infusion might result in its grounding of the carrier. Ethihad Group has stakes in Jet Airways.
Govt urges PSU banks to save jet
The central government has asked state-run banks to rescue privately held Jet Airways without pushing it into bankruptcy, as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election, two people within the administration told Reuters.
The finance ministry has in the past year sought regular updates from the banks, led by State Bank of India (SBI), on Jet's financial health, the people said. In recent months, the banks have provided weekly updates about a revival plan and also sought government advice, the people added.
"Top officials at the finance ministry seek regular updates on the issue," said an official at one of Jet's lenders, who did not want to be identified as discussions are private.
The finance ministry, SBI, PNB and Jet Airways did not respond to requests for comment.
Kingfisher's collapse
Most companies in Jet's financial condition would be placed by creditors into India's new bankruptcy process, two bankers said. However, memories of the chaos sparked by Kingfisher Airlines' demise in 2012 have prompted the government to seek a more sober road to rescue, they said.
Kingfisher's bankruptcy caused job losses, lessors lost millions of dollars and banks took massive writedowns.
Putting what is essentially a services provider like Jet through the bankruptcy process would diminish its value because it owns no major assets, unlike a manufacturing company, as most of its planes are leased, said another government official.
If it is pushed into bankruptcy and lessors start pulling even more planes out of service, there would be nothing left for any potential investors, the official said. Already 41 planes have been grounded by lessors in the past three months, leading to flight cancellations.
While on the surface Jet's future still hangs in the balance with its main shareholder Etihad at loggerheads over the final terms of any deal, behind-the-scenes support from the government means there is likely to be a bailout.
But there are no easy options, one of the sources said, adding that the lenders do not have the expertise to run an airline so they have to decide what to do once they convert their debt into equity.
The central government is also backing a proposal for Jet's founder and chairman Naresh Goyal to step down if it means saving the airline, another official said.
"Saving Jet is not equivalent to saving Goyal," the official said.
Rising airfare
Jet, with its fleet of 119 planes, once controlled a sixth of India's domestic aviation market. The 25-year-old airline is also one of only two full-service carriers that flies to international destinations. The other is Air India.
The government ideally wants four to six major airlines to ensure fares are competitive and passengers have greater choice, according to the top government source.
India plans to build 100 new airports costing about $60 billion which would need a steady stream of flights to sustain them, and that is possible only if there are enough airlines, a separate official said.
"The investment in these airports will solely depend on operators willing to have regular flights at affordable prices and one operator going bankrupt does not help," he said.
(With inputs from PTI and Reuters)
