Jet Airways India Ltd, the second local carrier to ground its entire fleet in the past decade, is casting a shadow on India’s booming aviation sector.
Once the nation’s biggest airline by market value, Jet Airways’ shares nosedived by a record 31% on Thursday in Mumbai after saying it would suspend operations on a “temporary” basis as it ran out of money. A severe cash crunch had pushed Vijay Mallya’s indebted Kingfisher Airlines Ltd to ground its planes in 2012. Kingfisher Airlines never flew again and Mallya is still fighting his extradition to India from London.
India’s aviation sector is an investment conundrum: it’s the world’s fastest-growing aviation market that has seen 54 consecutive months of double-digit percentage passenger growth and yet it’s notoriously difficult to make money in. As lenders to Jet Airways race to find an investor for the debt-ravaged airline, suitors will weigh the sector’s prospects against India’s high jet-fuel prices and a crushing fare war worsened by the entry of no-frills carriers.
