With tears in his eyes, a grief-stricken Naresh Goyal was so frustrated with the system that he told the special court last week that he would prefer to die in jail. Once upon a time, Goyal ruled the sky. The government used to consult them before taking any decision related to aviation policy.
Goyal’s airline Jet Airways once ruled the skies. But some wrong bets, competition from low-cost airlines and ups and downs landed the airline in trouble.
How did Goyal’s journey begin?
Naresh Goyal comes from Punjab. He started his career in the 1960s in a relative’s travel agency. He soon learned the tricks of this business and started Jet Air Private Limited in 1974, which provided sales and marketing services to foreign airlines. After working with the world’s leading airlines for many years, he started Jet Airways when the economy opened up.
Jet Airways started commercial operations in 1993. At that time this airline was competing with Damania Airways, Sahara India, East-West Airlines and the government’s Indian Airlines, Air India. However, most of the airlines could not survive in the Indian market.
Jitendra Bhargava, former executive director of Air India, told NDTV Profit that he caused huge damage to Indian aviation with his actions, knowingly or not. Goyal used his political reach and influence in policy making to prevent many airlines from starting operations.
Goyal used to interfere in the policies of the government
According to Bhargava, the 5/20 policy made by the government is considered an example of this. Under the policy, airlines were required to have 5 years of commercial operations and own a fleet of 20 aircraft to start international operations. There was no such rule in any other country. According to sector experts, Goyal is also believed to be behind stopping the disinvestment of Air India in the early 2000s.
Bhargava said that imagine the situation of Indian aviation if the disinvestment of Air India was completed.
The Indian aviation sector changed after the launch of InterGlobe Aviation’s IndiGo, Air Deccan and Go Air. Competition started among airlines for cheap air travel and there was a decline in the quality of services. In view of increasing competition from budget airlines, Goyal acquired Air Sahara for Rs 2,200 crore.
After the expensive acquisition, Jet Airways’ costs on international routes increased. Rapid expansion of the network, lack of sufficient in-house talent and price wars led to increasing problems for Jet Airways. The 2008 financial crisis hit demand and sent oil prices rising. Jet Airways was already troubled by rising costs. Now she started taking more loans.
Jet Airways got some relief
When Kingfisher Airlines was in dire need of funds and Vijay Mallya was appealing to the government to allow foreign airlines to invest in domestic carriers, Goyal was against that policy and refused to enter into an agreement with a foreign airline. However, when his airline got into trouble, he changed his opinion. Jet Airways got relief when the government changed its FDI policy. It allowed foreign airlines to buy up to 49% stake in Indian carriers.
At the same time Jet Airways was in need of funds. Etihad Airways acquired 24% stake in Jet Airways for Rs 2,000 crore after India and Abu Dhabi agreed to increase flights under a bilateral agreement.
But this relief did not last long. In the next few years, Jet Airways again needed funds. In April 2019, State Bank of India refused to inject further funds into Jet Airways as it had been burdened with losses and heavy debt for several years. At that time Jet Airways operated more than 120 aircraft and flew on hundreds of routes. After this the airline came to the ground and had to stop operations.
