Jet Airways employees will be absorbed by other airlines: Jayant Sinha
The good news is that the industry is growing, there is tremendous long-term demand for aviation services.
Now that Jet Airways has been grounded, what is going to happen to employees?
We want to make sure that the very capable and talented employees of Jet Airways are absorbed in the aviation ecosystem as quickly as possible and that they have a very good and soft landing. We are very focussed on ensuring good employment prospects for them.
The good news in all of this is the fact that the industry is growing, there is tremendous long-term demand for aviation services and I am very sure that all the talented and capable employees of Jet Airways will find a very good home whether at Jet Airways or in other companies. Of course, this is how markets work. What happens is that people move from less competitive companies to more competitive companies and in India, we have to build a globally competitive economy where the most competitive, most efficient companies thrive and succeed.
But some of these employees have not been paid for the last four months. Why is the government keeping a hands-off approach in this matter?
It is very clear that governments intervene in the economy only when there are systemic risks. This is a well accepted consensus around the world and you have to distinguish between IL&FS which would have led to contagion and a systemic set of issues and Jet Airways which has operated in a very smooth manner within the existing legal and regulatory framework and where there are no systemic risks.
For us, while handling the aviation system the important thing is to ensure that this market disruption moves through the system in a smooth manner and that all the assets and people are absorbed efficiently, without too much friction within the existing legal and regulatory framework. That is what we have done, capacity has come in quite quickly to absorb the Jet Airways capacity that has gone out of the system, fares have remained relatively stable and all the passenger inconvenience, refunds, cancellations we are proceeding on that to ensure that passengers are not inconvenienced in any way.
So markets do work and we have got to let markets work. When governments operate, they have to establish a legal and regulatory framework and within that, the various players have to conduct themselves.
But the gap is pretty glaring, About 20,000 jobs have been lost versus a SpiceJet or some other airlines that will be picking up planes or cabin crew or other staff. There is a huge gap in there?
You are taking a very short-term view. There is a transition process that happens and during the transition process, there are challenges that have to be done but whatever peoples’ dues are, it will have to be met in some fashion or the other. But give it some time and you will find that everyone will be very smoothly absorbed. I will take you back to Kingfisher, after Kingfisher’s shutdown everybody got absorbed into various other airlines and they continue to have great careers. Just give it some time and you will find that the process of absorption will happen quite smoothly.
There are people who died as well, there are people who could not pay their EMIs?
I feel terrible, I feel very sorry and terrible for that and of course, the goal is to be able to ensure that everybody is protected and everybody is safe, but we live in an open market economy and it is important for each individual to think about the fact that they have to themselves be able to have appropriate protection buffers and so on. Yes, companies do go in and out of business and that is a fact of an open market economy. That is how open economies work. Some companies succeed, some companies do not succeed. We all have to recognise that.
The reason I am asking you this question is because banks first said they will be pumping in Rs 1500 crore, but that money never really came in. Why did the banks develop cold feet? What really changed for them?
The banks have to make decisions in their commercial interest and using their commercial judgement. When I was in the finance ministry, we had a very important conclave in Pune which was back in 2015 and we made it very clear at that point and the honourable finance minister and the honourable prime minister made it very clear that in our government, banks would be free to do what they think is right in their commercial interest. They are responsible to their stakeholders, to their depositors and they should do what they think is commercially the right thing to do.
That is exactly what they are doing as far as Jet Airways is concerned. And we have to let them do that because that is how we create accountability in the system, that is how we reduce the price of risk in the system.
The government needs to establish a legal and regulatory framework and then various players have to conduct themselves accordingly. Otherwise, if there is arbitrary intervention by the authorities, you drive up the price of risk, you create very opaque and arbitrary decision making and then it is very difficult for people to understand how they need to conduct themselves.
You said there will be people who will be absorbed in other airlines and there is no need to worry, things will become better from here on. Precedence says once an airline is shut, it never comes back.
That is a question you have to ask the banks. Those who are bidding for Jet Airways have to take into account the value in Jet Airways. Right now, they have to bid for it and so on. Let the bank-led resolution process unfold. Our job as regulators is to ensure that markets operate well, that there is no arbitrariness in the rules driven process and the rules driven environment that we have set up. That is what we are engaged in.