No bailout for Jet, hints new Civil Aviation Minister

In his first public comments as India's new Civil Aviation Minister, Hardeep Puri indicated on June 14 in very strong words that there would be no Government bail-out for the bankrupt Jet Airways, suggesting instead that policy reforms should ensure that airlines do not run aground.

"You can't run a private sector organisation, goof it up and then go to the Government to say 'bail me out'," Puri is reported to have said at a conference organized by the Confederation of Indian Industry (CII) in New Delhi.

The Minister emphasized that the government couldn't become a "Nanny State" which serves as an escape route for bankrupt private institutions. Instead, reforms should be made so that no private company is ever in such dire straits. "We've made mistakes in Civil Aviation in the past which we need to correct," Puri said.

"You can't run a private sector organisation, goof it up and then go to the Government to say 'bail me out'," Puri said at a conference organized by the Confederation of Indian Industry (CII) in New Delhi

There were reports of Jet's share price sinking 9 per cent following the Minister's comments.

But Puri sought to give an assurance that his Ministry would solve the problem of shortage of capacity created by the grounding of Jet Airways would be solved.

"We have some turbulence in the sky. But I am confident we can meet that turbulence and turn it around," Puri said at a conference organized by industry chamber Confederation of Indian Industry.

On April 17, Jet Airways suspended all operations following bankruptcy. This suddenly reduced capacity for air travel, leading to a sharp hike in air fares. Nearly 90 of its total fleet of 119 aircraft have already been de-registered and lessors have started taking possession of these aircraft.

The Minister emphasized that the Government couldn't become a "Nanny State" which serves as an escape route for bankrupt private institutions. Instead, reforms should be made so that no private company is ever in such dire straits. "We've made mistakes in Civil Aviation in the past which we need to correct," Puri said

Efforts by the consortium of lenders, led by SBI, to find a buyer have not been successful so far. Only Etihad Airways submitted a bid. There were no bids from major investors including private equity firms like TPG Capital, Indigo Partners and National Investment and Infrastructure Fund (NIIF). There were reports of two unsolicited bids from foreign investors.

Restoration of capacity vacated by Jet on international and domestic routes is an immediate challenge for Puri's ministership.

Puri said domestic airlines need to be given a 'level playing field' with their overseas counterparts.

Reform in the taxation structures with respect to Civil Aviation is another issue which will demand the immediate attention of the newly re-elected Government.