Jet’s Blues: A look at the turbulent life and times of a troubled Indian airline

Last year, according to IATA, India’s domestic airline market, measured by revenue passenger kilometers, grew a sensational 23%—and that’s after growing 20% the year before. And what is all this hyper-growth doing for Jet Airways?

Not nearly enough.

To be fair, India’s second largest international airline is on a hot streak of sorts, ending calendar Q4 with its seventh consecutive quarter of operating profits. But its lackluster 4% operating margin for calendar year 2016, following a 3% showing in 2015, hardly makes up for two hellish years in 2014 and 2013. In just those two years alone, Jet’s net losses excluding special items amounted to nearly $600m. Since 2011, collective net losses have topped $900m. There’s thus no escaping the fact that Jet’s financial performance this decade has been downright awful.

With 100m enplanements last year, India now has the world’s third largest domestic airline market, surpassing Brazil and trailing only the U.S. and China. What’s different, though, is that the American, Chinese and Brazilian markets have all experienced successful and universally helpful consolidation involving multiple mergers. The U.S. and China were each left with three giant airlines, or four if you count Southwest and Hainan Airlines. Brazil has just four major airlines. But India? It saw three significant mergers in the 2006-07 timeframe, all of them regrettable. India’s government merged its two basket-case airlines—Air India and Indian— into one basket-case airline that suffered years of integration hangovers. The now-defunct Kingfisher acquired India’s first-ever LCC Air Deccan, one of its now-incarcerated owner’s many mistakes. And Jet itself swallowed a rival called Air Sahara, creating value only for the many lawyers involved in the deal’s subsequent legal disputes. Air Sahara was re-branded JetLite, a consistently money-losing operation that remained its own separate company with its own financial accounts until actually merging with Jet just last year.

The Air India and Jet mergers did their part to remove some capacity and competition, as did the eventual demise of Kingfisher in 2012. Since then, fast-growing IndiGo has emerged as India’s largest domestic airline, earning strong profits with low…

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