Jet Airways
An employee sits at a Jet Airways ticket counter in Mumbai airport. Reuters

King of Good Times Vijay Mallya, the founder of now defunct Kingfisher Airlines, on Wednesday sent a message empathising with Naresh Goyal, the Master of Repartees, on the eve of the day debt-stricken Jet Airways suspended all operations. The irony behind the message from Mallya, now fighting extradition from the UK to India for cheating banks, to Goyal, the founder of Jet, will not be lost on those who have followed the history of the two airlines and the lives of their founders.

Despite residing in London, the two individuals are poles apart and would not normally be caught in the same place together, unless circumstances force them. Mallya is the antithesis of what Goyal is. Yet both had this overwhelming passion for control to run their companies as personal fiefs. Perhaps, that is what proved the undoing for both airlines.

Jet Airways that Goyal founded in 1992 as an air taxi service and later as a full-service carrier had just begun international operations with flights on Chennai-Colombo sector when Kingfisher flew for the first time in 2005. It took three more years for Kingfisher to launch international operations with the first flight on Bengaluru-London route. But the trouble for both started with the ill-advised use of public money to buy loss-making airlines. Kingfisher bought Air Deccan in 2007 and could never fully come out of the morass of debt.

Kingfisher would suffer more than Rs 1,000 crore loss for three consecutive years after that. By 2012, the airline's losses rose to more than Rs 7,000 crore, with half of its fleet grounded and staff on strike. The taxmen were after Mallya for failing to pay dues worth Rs 700 crore for which they sealed Mallya's bank accounts in 2012. It flew for the last time on September 30, 2012. The aviation regulator suspended the airline's licence in October 2012 and finally scrapped all its domestic and international routes on February 25, 2013.

Jet Airways registered itself on Bombay Stock Exchange (BSE) in 2004, a year before Kingfisher took off, and launched the IPO in 2005, raising Rs 1,890 crore. Perhaps trouble started for India's first private airline with its acquisition of the assets of loss-making Air Sahara for Rs 1,450 crore, renaming it as JetLite. Later it was merged into the parent airline. Though Jet Airways would become the country's largest airline in 2010, enjoying 22.6 per cent passenger market share, a position it lost in August 2012 to InterGlobe Aviation's budget carrier IndiGo that began operations in 2006. Jet Airways sold 24 per cent stake to UAE national carrier Etihad Airways in November 2013, making the foreign partner the second largest shareholder after Goyal's own 51 per cent.

However, the relationship between Goyal, as notorious for his abrasive behaviour as appreciated for his quick wit, and the strategic partner that tried to inject professionalism into the airline soured soon. Cramer Ball, an Etihad nominee who joined Jet as CEO from May 2014 left in December 2015, after a falling out with Goyal. That Ball was named Etihad's main negotiator for talking to the lenders showed how much Etihad hated Goyal as the head of Jet.

Jet's slide from the position of India's second largest airline with 21 per cent passenger market share to the bottom has been swift, fuelled by cut-throat completion from budget carriers like SpiceJet and GoAir. The airline's debt has spiked to Rs 8,500 crore.

As the financial crisis escalated, the lenders stepped in, taking control of the shares Goyal had pledged with them. Lenders now control 51 per cent stake and forced Goyal to step down as chairman and from the board, in deference to the wish of Etihad that is one of the bidders for the debt resolution programme. Goyal's tenacity, however, failed this time as the lenders' consortium that State Bank of India (SBI) heads shot down his attempt to take part in the bidding in partnership with a US private equity firm based in Delaware. Jet has suspended operations from April 17, even as the lenders await the final bids of the four entities that have filed their expression of interest (EoI).