Jet Airways’ liquidation wasn’t the ideal way out of insolvency

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Subscribe to enjoy similar stories. The Supreme Court (SC) last week finally brought down the guillotine on Jet Airways, thereby putting a hard stop to a painfully prolonged insolvency resolution process that had kept the ailing airline on artificial respiratory support. Jet Airways was a child of economic liberalization in the early-90s that had opened India’s aviation skies to private operators.

The industry, as expected in any sector during its initial brush with competition, underwent a churn, and many airlines—East-West, Modiluft, Damania, among others—bit the dust. Jet Airways, however, survived with overseas equity infusion, astute fleet expansion, premium service standards and a dash of political patronage that earned it lucrative overseas landing slots. However, this failed to insulate the airline from competition mounted by new low-cost airlines, which, combined with escalating fuel costs in 2018, forced Jet to renege on its debt repayment commitments and grounded the airline in 2019.

An attempt by an overseas consortium to revive the air carrier proved abortive, with gaping differences between Jet’s creditors led by State Bank of India and its would-be acquirer. The apex court’s order shines a light on India’s flawed bankruptcy process and, unwittingly, on its own constricted view of the fraught issue. The SC judgement, apart from ordering the summary liquidation of Jet Airways, also came down hard on the flawed insolvency process and reprised its exasperation with continuing delays in resolution as well as an evident lack of capacity and domain knowledge displayed by the National Company Law Tribunal and the appellate tribunal.