Naresh Goyal: The unbearable pain inflicted on India’s civil aviation industry

By T. S. Shankar

Mumbai-based Jet Airways and its founder-chairman Naresh Goyal are hogging the media limelight for his business acumen in building a world-class private airline capitalising on the then Indian government’s ‘open sky policy’ in the early 1990s and then destroying it on a whim.

Naresh was single-handedly responsible for successfully building Jet Airways from scratch in 1993 during the start of the economic liberalisation era in India. Since its inception, Jet Airways became a brand quickly, and globe-trotters were regulars on its services.

The airline, a societal status among corporate honchos using its flights, has now taken center-stage for media-bashing on the “wrong moves” initiated by Naresh and his wife, Anita Goyal. The husband-wife duo was on the airline’s board but disbanded in 2019.

Born in Sangrur, a small town in Punjab, Naresh Goyal came from a humble background. But his entrepreneurial journey can be a good case study in business management. He and his Jet Airways were once the nation’s pride but have now degraded into a symbol of shame for India’s civil aviation sector.

File Photo: Naresh Goyal, formerly promoter of Jet Airways.

It started as an air taxi, with a 20 percent equity from Kuwait Airways and Gulf Air; both foreign investors exited Jet Airways later. But Naresh Goyal went on to build the domestic airline into a “full-service carrier.” And it is no mean task.

Naresh Goyal then dominated the azure Indian skies by kick-starting the first international operations from Chennai to Colombo in 2004, taking advantage of the South Asian Association for Regional Cooperation (SAARC) bilateral ties.

With his proven networking capabilities, Naresh Goyal transformed the airline into a top-class service, both on the ground and in flight, matching global standards. Then, he quickly rolled the dice with an Initial Public Offering (IPO) in 2005.

The media-shy Naresh Goyal and Anita only selected the best resources, especially those handling public interface. They also ensured that their gleaming Boeing fleet and the workforce worked hard to turn around jets rapidly, providing the best services, punctuality, and connectivity.

That was Jet Airways and Naresh Goyal’s glorious past. Industry analysts and aviation critics quickly point out that “wrong moves” by Naresh Goyal and his over-ambitious decision saw the airline encountering “turbulence” in quick succession.

Acquisition of Air Sahara in 2007 for a whopping Rs. 1,450 crores dealt a death blow, pushing the cash-rich airline to a cash-starved carrier, reducing its ability to spend on the highly competitive capital-intensive Civil Aviation industry effectively.

The inking of the Air Sahara deal gave Jet Airways never-ending problems: financial, legal, and workforce-related. Air Sahara was acquired to take on Kingfisher Airlines, started by the flamboyant liquor baron Vijay Mallya, apart from other competitors such as Air Deccan, IndiGo, and SpiceJet. At least, this was the reason cited.

Then came the next blunder from Naresh Goyal. He decided to buy a mixed fleet of 10 wide-bodied Airbus A330 jets and Boeing-777 aircraft. This was a questionable decision, much against his top management’s advice.

His direct interference in the airline’s operations, including financial management, plane leasing, and overseas carriers, is being blamed for the airline turning red and the balance sheet showing a negative. Jet Airways was now a loss-making entity.

The first loss was reported in the fourth quarter of the 2018 fiscal. The loss was estimated to be Rs.1,036 crore that fiscal, against a net profit of Rs. 602 crore in the same period the previous year.

In April 2019, Naresh Goyal decided to suspend all flights as cash ran out and lending institutions and banks refused to pump in more funds, thus bringing down the curtains on one of the finest airlines in India.

Interestingly, when the airline started slipping out of his hands, Naresh Goyal wrote an open letter to all the employees, stating that he would “go to any extent to sacrifice for the sake of the employees.”

Unfortunately, none thought his actions would lead to the airline’s closure, leaving the employees to fend for themselves.

The airline’s actual ownership was always an issue of debate with the then union disinvestment minister, Arun Shourie, raking up in Parliament. Shourie questioned, “Who is the real owner of Jet Airways.”

 To add aviation fuel to the Jet Airways fire, the shocking revelations by investigative journalist Josy Joseph in his book “A Feast of Vultures” brought to the fore the business misdemeanors of Jet Airways.

The most recent investigation by the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI), and other law enforcement agencies has put Naresh Goyal on the mat.

Though stoutly denied by Naresh Goyal and his team, these agencies traced several “questionable transactions of money laundering from India to tax haven islands and siphoning off bank loans for purchasing personal luxury movable and immovable assets overseas.”

Now, Naresh Goyal is imprisoned for money laundering, a case filed by the ED, acting on a Rs. 538-crore fraud complaint from Canara Bank. He allegedly siphoned off funds to purchase “personal luxury movable and immovable assets.”

Naresh Goyal turned emotional in court during a hearing.  “I cannot bear this pain. I have nothing more to share with the agency. I am in severe pain, and my body won’t cooperate.” He is now a remand prisoner in Arthur Jail in Mumbai.

While several agency probes threw up more questions than answers on Naresh Goyal and his asset creation, it remains to be seen if more skeletons tumble out of the cupboard when the agencies dive deep into the affairs of Jet Airways.

Vijay Mallya-owned Kingfisher Airlines turned an eye sore in India’s aviation industry, as its promoter is currently facing a case of Rs 7,000-odd-crore fraud based on a complaint from a consortium of seven banks led by the State Bank of India.

Mallya’s decision to acquire the no-frills, low-cost airline Air Deccan, owned by Captain G. R. Gopinath, was even more bizarre than the Jet Airways story. Mallya has fled the country and is facing a legal battle with the banks.

Go Air, now rebranded as Go First, promoted by the Wadia Group, has filed voluntary insolvency proceedings before the National Company Law Tribunal in Delhi, citing a severe cash crunch, blaming “faulty” Pratt & Whitney engines for grounding half of the airline’s fleet.

More recently, Akasa Air, another low-cost airline, which began operations in August 2022, is facing turbulence, with rumours of a possible closure. The sudden exodus of 43 pilots from the airline and hopping on to the Tata-run Air India Express bandwagon has raised eyebrows.

Akasa Air was founded by Vinay Dube and co-founded by Aditya Ghosh, formerly of IndiGo fame, with late billionaire trader Rakesh Jhunjhunwala holding a 46 percent stake.

Dube has allayed the fears of closure but has instead indicated that the carrier will be forced to see drastic curtailment of its flight operations. Both Go First and Akasa Air are Mumbai-based airlines.

There is hope among industry enthusiasts and experts about the new owners of Jet Airways — London-based Kalrock Capital and United Arab Emirates businessman Murari Lal Jalan, who has pledged to inject Rs. 1,000 crores as working capital under the revival plan. Whether the re-start of the airline restores investor confidence in India’s airline industry remains to be seen.

As an avid industry veteran and former founder of Air Deccan, Gopinath strikes an optimistic note. “The government should have saved Jet Airways to protect jobs and infrastructure. I think it is sad that the airline was not saved. You should not punish the airline and its employees for the mistakes of the promoter.”

Gopinath added that Naresh Goyal should have sensed the problem and brought in equity before it was too late. The testimonial of Gopinath truly brings out the essence of the changing skyline of India’s aviation industry, with new players keen to jump into the fray to start a new airline, not realizing or ignoring the risks involved.

The story’s moral: “Few business failures are inseparable from the failings of their promoters.”

(Edited by N. C. Bipindra)

(The writer is a Chennai-based award-winning journalist with two nominations for the “Best Decade of Excellence Award for Aviation Journalism.” He previously worked for The Hindu for over two decades.)

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