Naresh Goyal: The Pilot Who Lost Control

Naresh Goyal
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Ejecting the Jet Airways founder was the only way to save the airline

WHEN NARESH GOYAL finally stepped down on March 25th from the board of directors of the company he had nurtured for 26 years, the stock market greeted it with relief. Share price zoomed from around Rs 220 to Rs 280 in a single day. In a farewell message to all Jet Airways’ fliers, Goyal mused, “I would be lying, if I said this was not an emotional moment for me”. For Rajnish Kumar, chairman of the State Bank of India, the chief lender, though, it had been a 15-hour-ordeal to convince Goyal that the company would crash with him around.

Nobody would say that Goyal had lacked passion or application for the airline which he built from scratch. His passion for the aviation business has its roots in the 60s when, working as a cashier in his maternal uncle’s travel agency, he scooped up the general sales agency for Lebanese International Airlines. That was an age of binding ties between an Indira Gandhi-led India and the Middle East. Goyal proved remarkably canny in finding friends in that territory; in a few years, he held posts at the Indian operations of Iraqi Airways, Royal Jordan Airways and Middle Eastern Airline. By 1974, he had set up his own agency, named Jetair, which represented not just a clutch of Middle Eastern players but also global big-ticket airlines such as Air France, Austrian Airlines and Cathay Pacific.

However, his foray as owner of an airline had to wait. It was only in the 90s when its first fleet of Boeing 737-800s began arriving that Jet Airways emerged as a challenger to the monopoly of Indian Airlines. In the new millennium, the UPA Government’s liberal aviation policy induced Goyal to think bigger. In its February 2005 IPO, the company offered 20 per cent of its stock that helped it to raise funds to go international. Soon it took out on lease two Airbus A340-300s and launched a daily afternoon direct flight service from Delhi to London. It is this flight that gave Goyal his first acceptance among the Indian elite as someone who has arrived.

Two years later he would commit his biggest strategic error by buying the down-and-out Air Sahara in 2007 for an egregious price, all to ensure that Jet Airways remained the only private airline to fly abroad. Throughout, he remained obsessed with the fear of competition, using his contacts in political parties to torpedo a proposal from the Tata Group to partner Singapore Airlines for Indian operations.

Meanwhile, the aviation market became increasingly competitive, with the profitable First and Premier classes selling only after heavy discounts, while Economy, the only class of ticket flying off-the-shelf, cost the airline a fortune. For domestic sectors, Goyal tried different labels, Jet Lite and Jet Konnect, but was no match to the dynamism of new low-cost entrants like Indigo. As debt to banks swelled, a saviour was urgently needed. The Tatas were still willing to take a stake, but Goyal wouldn’t give up management. In 2013, he brought in Etihad, UAE’s second airline, as a partner. But the airline itself was saddled by a $3 billion loan and had little inclination to bail out Jet Airways.

Goyal might go down in the annals of Indian business history as someone who was so insistent on retaining control that he almost brought his airline down. Steve Forte, who led Jet Airways in the early 2000s, said that if Goyal continued in the cockpit, “the airline will burn through any new cash infusion”. Jet’s future is still uncertain but, without him, not as bleak.