Goyal flies high as Jet Airways dives

Naresh Goyal,Chairman of Jet Airways, has run away along with his cook and servants to London, just like Vijay Mallya, Nirav Modi, Mehul Choksi, and Lalit Modi. His 20,000 employees are on the roads. The closure of Jet Airways is a blow to the regulators and advocates of privatisation. The massive loot done by Goyal is a bizarre example of a nexus with politicians and civil servants. Before we delve into why Jet failed, one must know what is happening after the lock-out. Sources disclosed that the government is trying to negotiate with the lessor of planes to allot them to other airlines. The Ministry of Civil Aviation (MoCA) is on the way to waive off excise duty (the rule is that once a plane is re-registered with a new lessee, the latter has to pay excise). Though the Parliamentary elections are on and no policy decision can be taken, the government wants to mitigate the damage. Sources disclosed that MoCA is likely to allot Jet’s 113 planes to Vistara, Air India, Indigo, and Spice Jet. Air India and private operators have urged MoCA to allot traffic routes to them. Keeping in mind the air traffic, MoCA is temporarily allotting routes for three months. A fierce battle is on to grab the creamy national and international routes among Spice Jet, Indigo and Vistara. In the meantime, Spice Jet owner Ajay Singh has reportedly offered half salaries to ex-employees, including pilots, of Jet.
But what one has to remember is that Naresh Goyal’s operations were void ab initio right from the beginning. So, the story is how the he milked his own airline and became a private billionaire. How smartly he siphoned off money can be a case study for MBA students. The financial mess was created by the group’s 18 smaller companies – 14 of them registered in India and four abroad. Goyal connected these companies into the big frame of Jet and sucked out profits. Jet sank as Goyal prospered. For instance, the shares of Jetair Pvt Ltd, which is a GSA for 15 international airlines in India, and Jet Airways, are held by Goyal, his family members and three other promoter group companies – International Cargo Carriers, France Air and Jet Enterprises, whose shares are held by other promoter group companies, Goyal and his family members. These companies are inter-connected through a complex web of shareholding, and Goyal owns them directly or indirectly. The four promoter group companies registered outside India are Jet Airways LLC, Jet Airways of India Inc, India Jet Airways and Jetair Worldwide AG.

Jet Airways LLC is incorporated in Dubai, and provides GSA services to Jet Airways. Jet Airways of India and India Jet Airways are wholly owned subsidiaries – registered in California, US, and South Africa, respectively. Jetair Worldwide is incorporated in Switzerland and is engaged in providing tourism-related services. International Cargo Carriers is a GSA for Kuwait Airways for its cargo services from Mumbai. Goyal also represents Air France for passenger services and National Travel Services is a GSA for American Airlines and Kuwait Airways for passenger services. Jetair was incorporated in 1974. The astonishing and amazing part of the story is that before 2013, Jet Airways was controlled by a foreign company, Tail Winds Ltd incorporated in the Isle of Man, which held 79.99 per cent. As per Indian laws, no foreign entity can hold more than 49 per cent shares in an airline. In 2003, OCBs (Overseas Corporate Body) were derecognised as an investor class in India. Tailwind started diluting its share in 2013 when Etihad Airways started investing in Jet Airways. Why were SEBI, MoCA and the DGCA silent for so many years, and the various regimes protective of Goyal. Jet Airways can be saved, if the government decides to nationalise Jet and its group companies, and confiscate their properties. Sources disclosed that if the government acts, India can earn nearly two billion dollars from the operations. But who will bell the cat, and will the new regime have the political will to do so.