The Jet Saga – How India’s first dedicated air cargo service provider ended with bailout

Post By : News Desk
Post Date : March 31, 2019
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Air Cargo industry hit hard with 65 percent of Jet fleet grounded

The nosedive of Jet Airways after 26 years of operation stirred the aviation industry that is already in need of more support in terms of regulations, funding and staff. Once India’s second largest airline by passenger carried is not able to pay its staff.

While the airfares are soaring due to lesser availability of aircrafts the same has hit the air cargo industry scrambling for cargo space. Jet airways in 2015 had launched dedicated air cargo services and were first in the country to do so after Etihad acquired 24 percent stake in the company.

But come March 2019 the airline is operating at 35 percent of its original capacity. Only 41 aircrafts in its fleet of over 120 aircrafts are operating as rest of the fleet is grounded due to various reasons of which non-payment of different dues is a major one.

The sudden scarcity of air crafts has led to a huge space crunch in the air cargo industry denting the current market capacity of manufacturers and service providers. Jet had services to 37 destinations across India and 19 global destinations.

Although banks have agreed to rejuvenate the company with a funding of Rs 1, 500 crores for ultimately making it sale worthy the conditions do not seem to be improving. Jet held the second space for cargo transport, now with around 65 percent of fleet grounded the lack of air cargo space will lead to rise in air freight rates. It was only after Jet started cargo operations in 2015 after which the air cargo industry saw constant growth in the country.

In 2003 Jet had market share of 44% and 27.7% around 2007. In February 2019, it dropped to the fourth place with 10% share behind IndiGo (43.4%), SpiceJet (13.7%) and Air India (domestic, 12.8%) as per DGCA data

Source – Ministry of Civil Aviation, Govt. of India

For aviation industry in India the year 2019 did not start good because of three reasons. First escalating tensions between India and Pakistan leading to closure of air space, second Jet Airways facing financial crisis and third crash of Boeing 737 MAX aircraft, operated by Ethiopian Airlineskilling 157 people.

The airline regulator ceased the operations of the Boeing aircraft in India causing grounding of several aircrafts of major operators. The sudden grounding of large number of aircrafts of Jet and other airlines caused a deficit of over 10 lakh seats in last month. In similar manner large chunk of air cargo space provided by these planes was also taken away.

The worsening Jet tale

  • Current total debt $1 Billion
  • Founded Jet Airways in 1993 with a fleet of four leased Boeing 737 aircrafts.
  • 2006 acquired Air Sahara for US$500
  • February 2013, market value dropped by $67 million over fare war
  • April 2014, $379 million deal with Etihad for 24 percent stake
  • April 2015 dedicated air cargo services launched
  • April 2018 losses stood around Rs 1, 323 crores
  • August 2018, 25 percent cut in employee salaries
  • September 2018, free meals service ceased in economy class
  • October 2018 retrenchment begin with 30 employees being laid off
  • March 2019, bank debt Rs 8,414 crore.
  • Over 400 flights cancelled till March 2019

Take of industry experts on the issue

Industry experts believe that the time it will take for Jet to revive its fleet will cost the cargo industry due to peak traffic season.

“London is one of the critical sectors on the international routes where major commodities such as pharmaceuticals, perishables etc. are flown in. Now a capacity constraint is causing price hike. Jet Airways was covering many other cargo hubs like Singapore, Bangkok, Kathmandu, Colombo in South East Asia and South Asia. Grounding of Jet aircrafts has impacted the sector sizeably.


Satish Lakkaraju, Chief Commercial Officer, Agility

Satish added, “Closure of the Pakistan air space due which flights ex Delhi had to be re-routed, fly with additional fuel resulting in less cargo uplifts.”

“Jet Airways has been one of the growing airlines with significant belly cargo capacity for both domestic and international sectors. Recent issues of the airline due to which they have grounded a sizable number of aircrafts has definitely affected cargo industry.”


Prediman K Koul, Country Head Airfreight, Jeena & Company


Industry expert, Koul noted, Jet being a direct service for most of the routes where they have been flying, is considered as a premium service and hence exporters/importers plan their urgent shipments with the operator.

On the same lines, Yashpal Sharma, said, Jet Airways is a key player in the Indian cargo Industry. Their market share in the 2 major gateways, Delhi and Mumbai, is pretty large and they are in the Top 5 of these gateways. They carry substantial loads from the other airport cities of India too.

“The air cargo market in India witness a seasonal increase in business during the period of February to April each year and with grounding of Jet Airways aircrafts has led to a serious space crunch and over 20% increase in freight rates on certain routes.”  


Yashpal Sharma, Managing Director, Skyways Group

Another major factor adding to the space crunch in India is the reduced capacity on most airlines servicing Delhi due to the India-Pakistan air space closure. As these airlines are forced to go around Pakistan for westbound flights they are carrying more fuel and less cargo.

Bigger space crunch inevitable

The problem of space crunch is all set to magnify if Indo-Pak air space does not open as rise in mercury will directly impact payload carrying capacity of airlines. In this way problem of space crunch will become even more serious.   

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