Jalan-Kalrock Consortium, the winning bidder for bankrupt Jet Airways, on July 31 said it has “successfully obtained renewal for the Air Operator Certificate (AOC) of Jet Airways from the Directorate General of Civil Aviation (DGCA) on July 28, 2023.”

Launched in 1993, the cash-strapped airline filed for bankruptcy in April 2019. The AOC was re-issued on May 20, 2022. However, the airline did not start operations and the AOC expired on May 19, 2023.

On the other hand, embattled carrier Go First is reworking its strategy of a leaner fleet to resume operations while aiming to secure higher interim financing of Rs 500-700 crore from creditors. The budget carrier applied for voluntary bankruptcy with the National Company Law Tribunal (NCLT) on May 2.

Despite regulatory nod, the airline revival plans are fraught with strong headwinds.

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“Reviving a bankrupt carrier is no different than starting a new airline,” said Alok Anand, chairman and chief executive officer of Acumen Aviation. Operators have to bring together everything right from pilots, crew, engineers, maintenance slots and aircraft to get started.

The budget carrier has sent the global aviation industry into a tizzy by filing for voluntary insolvency and airlines in a revival stage will be faced with challenges in convincing lessors for aircraft, Anand further added.

Funding remains big challenge

Apart from lessors being cautious about the Indian market, the major challenge lies in putting massive funding needed to bring a bankrupt airline back into the skies.  

“Renewal of AOC is just one step, the airline needs capital to restart operations,” underscored Mark Martin, CEO of Martin Consulting. Creditors (banks) are very wary of investing in the risky and capital-intensive airline business, he added.

Committed management and a credible and viable business plan are the other essential ingredients that define the revival of a bankrupt airline, added Rishi Jain, CEO, Jain Aviation Consultants.

Airlines are also struggling with major supply chain challenges since the pandemic. In such a situation, those restarting operations after being long grounded are likely to face issues in getting aircraft in time and ramping up their fleet.

Citing the example of Akasa Air, which has done significantly well in its first year of operations and is set to start international operations late this year, Martin said, “Access to capital is much easier for a new airline which doesn’t come with any background. It brings a fresh outlook for both lessors and creditors.”

Airlines employees (and ex-employees) have complained about failure in payment of salaries. The historical debt on the companies is making revival more taxing. So far, JKC has to pay Rs 180 crore to the erstwhile creditors of the airline and Rs 250 crore to former employees. Go First, on the other hand, owes Rs 6,521 crore to its creditors. 

“Jet also has the backing of a credible brand name unlike other airlines in the past and its customer loyalty programme will give it a set customer base to kickstart operations,” argued Anand.

On the other hand, experts suggested that Go is also taking steps in the right direction which will lead to the airline likely restarting operations this month.