Distressed airline Jet Airways (India) Ltd. halting its entire operations from Wednesday night for want of funds is set to rattle India’s aviation ecosystem with its adverse impact on other business in the value chain as well as on a large number of jobs. It is also set to have a ripple effect on market competition, fares and the travel experience as rivals struggle to cater to a sudden availability of market share left behind by Jet.
To ensure that there is a plan in place to protect the aviation ecosystem from Jet’s failure and to attempt to bridge the capacity gap, aviation regulator the Directorate General of Civil Aviation (DGCA) will meet executives of airline industry and that of airport operators separately on Thursday.
One of the biggest fallout of Jet’s collapse is the loss of jobs. Industry executives said it is not the people on the rolls of Jet alone who are hit. “The loss of job of every employee on the rolls of Jet Airways also costs five others indirectly involved in the value chain their work,” said a senior industry executive who spoke on condition of anonymity. That would mean loss of work for about 80,000 people considering Jet has about 16,000 workers.
Airport operators and fuel suppliers have also lost a big customer, with Jet’s collapse. The airline which had 119 aircraft in its fleet used to operate about 600 flights a day before the liquidity crisis hit the company last year. One big challenge for the regulators is to ensure that airfare does not go up sharply during summer holidays. Spot ticket prices have already surged sharply in recent weeks. Other airlines grabbing the routes left vacant by Jet is set to impact completion in the market, giving extra pricing power to the dominant player. Surging fares is also likely to have an impact on the travel plans of people.
Jet’s failure is also set to reignite the demand for inclusion of aviation turbine fuel within the Goods and Services Tax (GST), which will help airlines to reduce their tax outgo as the new indirect tax system is without the cascading effect of taxation.