SC Orders Liquidation Of Jet Airways; How Many Indian Airlines Have Collapsed in the Past 15 Years?

The Indian aviation sector has witnessed significant turbulence over the past 15 years, with several major airlines ceasing operations despite the country’s growing travel demand. Another similar  liquidation of airlines took place on November 7, 2024. The Supreme Court of India on Thursday ordered the liquidation of Jet Airways, highlighting the ongoing struggles in the Indian aviation market. This marks the culmination of an intense period of financial instability, fierce competition, and operational challenges.

The Jet Airways Liquidation

The recent decision by the Supreme Court to liquidate Jet Airways is a significant moment in the country’s aviation history. Jet Airways, which once held a dominant position in the Indian airline industry, ceased operations in April 2019 after struggling with mounting debts, poor financial health, and intense competition from low-cost carriers. Despite efforts to revive the airline under a new management consortium, the process encountered numerous setbacks. This led to the latest Supreme Court judgment in November 2024, which pointed out that the National Company Law Appellate Tribunal (NCLAT) had not adhered to earlier rulings by the top court. Jet Airways’ closure has now been confirmed as a permanent shutdown, ending a historic chapter in Indian aviation​.

The Decline of Indian Airlines: A Pattern of Struggles

Jet Airways is far from the only major airline in India to succumb to financial failure. The timeline of Indian airline collapses reveals a pattern of operational challenges, mounting debts, high fuel prices, and market mismanagement, often exacerbated by fierce competition and a low-cost pricing war.

1. Kingfisher Airlines (2005–2012)

Founded by businessman Vijay Mallya, Kingfisher Airlines once promised to revolutionize the Indian aviation industry with its luxury offerings. However, Kingfisher quickly became a symbol of airline failure. The airline’s high operating costs, massive debt, and unsuccessful merger with Air Deccan in 2007 led to its eventual closure in 2012. Despite enjoying a large market share at its peak, the airline was unable to recover from continuous financial losses​.

2. Paramount Airways (2005–2010)

Paramount Airways, a regional carrier operating out of Chennai, aimed to serve business travelers with its fleet of new-generation Embraer aircraft. However, the airline struggled with high operational costs and an unsustainable business model. Despite initial success, Paramount shut down in 2010 due to mounting debts and an inability to expand its fleet​.

3. Air Deccan (2003–2007)

Air Deccan, India’s first low-cost carrier, revolutionized air travel by making it affordable for the masses. However, its rapid expansion led to operational inefficiencies, and the airline was unable to generate consistent profits. In 2007, it merged with Kingfisher Airlines, but the combined entity continued to face financial difficulties, leading to the eventual downfall of both​.

4. Air India and Indian Airlines Merger (2007)

Air India and Indian Airlines were merged in 2007, but the consolidation did not bring the expected financial stability. While Air India continued to operate, its combined operations were plagued with inefficiency, mismanagement, and rising operational costs. In recent years, Air India was privatized under Tata Group, signaling a new era for the carrier, though the merger of Indian Airlines remains a classic example of how consolidation doesn’t always guarantee success​.

5. GoFirst (2023)

GoFirst (formerly GoAir), owned by the Wadia Group, filed for bankruptcy in May 2023 due to mounting debts and the grounding of half its fleet, which was caused by delays in engine deliveries from Pratt and Whitney. Despite a strong customer base and a considerable share in the low-cost segment, GoFirst struggled to remain profitable amid the volatile aviation market and high operating costs​.

6. Other Regional Airlines

A number of regional airlines have also shut down in recent years, including:

• Air Mantra (2012-2013), which ceased operations after a short stint due to low passenger bookings​.
• Air Pegasus (2015-2016), which collapsed under financial strain despite initially operating in regional markets​.
• Air Costa (2013-2017), which also faced operational difficulties leading to its shutdown after four years of operation​.
• Air Carnival (2016-2017), which halted services after facing financial turmoil​.

Why Do So Many Airlines Fail in India?

The frequent collapse of airlines in India can be attributed to several interconnected factors:

1. High Operational Costs

Fuel prices, taxes, and maintenance costs have always been major issues for Indian airlines. The volatility in fuel prices, especially during periods of global instability, has a disproportionate impact on airline economics. Airlines like GoFirst, which were grounded due to engine delays, also face high maintenance and leasing costs that can break the bank​.

2. Intense Competition

India’s aviation market is fiercely competitive, with numerous low-cost carriers such as IndiGo, SpiceJet, and AirAsia India providing low fares. This has led to price wars that make it difficult for legacy airlines to maintain profitability​.

3. Debt and Mismanagement

Many airlines, especially the older ones like Kingfisher, Jet Airways, and Air India, accumulated massive debts over time. Poor financial management and lack of strategic planning often led to their downfall​.

4. Economic Instability

Indian airlines are also vulnerable to macroeconomic factors such as inflation, changes in government policy, and fluctuating currency exchange rates. The falling value of the rupee, for example, increases the cost of importing aircraft and spare parts​

A Grim Future or Room for Recovery?

Despite the numerous collapses, India’s aviation market remains one of the fastest-growing in the world. However, with intense competition, high costs, and frequent financial struggles, only those airlines with robust business models and efficient management seem to survive. The collapse of major carriers like Jet Airways and Kingfisher serves as a cautionary tale for those looking to enter the aviation sector, particularly in a market that is still developing despite its vast potential​

In conclusion, the Indian aviation sector has experienced significant turbulence over the past 15 years, with over a dozen airlines collapsing due to a mix of financial mismanagement, stiff competition, and operational challenges. Whether new carriers can avoid the mistakes of the past remains to be seen, but for now, it’s clear that only the fittest survive in India’s skies.

Also read: Jet Airways Faces Liquidation As Supreme Court Invokes Article 142: What It Means For Creditors