Naresh Goyal transformed Indian air travel. When it began operations in 1993, his Jet Airways provided an efficient and quality alternative to the lackluster state carrier Air India. Like other entrepreneurs such as Sunil Mittal, Narayana Murthy and Subhash Chandra who were all first movers when the country opened up the economy to the private sector, Goyal became a well-regarded billionaire. Through his holding company Tail Winds he owned a majority stake in Jet Airways. In 2013 he sold for $380 million a 24 percent share in Jet to Abu Dhabi-based Etihad Airways. It seemed an important alliance which generated confidence in his airline a year after his local rival Kingfisher Airlines collapsed with debts of $1.1 billion. But in 2007 Goyal had revived a deal to take over rival Sahara Airlines. The $500 million he paid was too much. Jet Airways was already struggling with debt and hemorrhaging cash. A plan to slash costs by cutting staff and unprofitable routes was only partly carried through. Goyal's lenders, including the State Bank of India remained supportive, even though the airline was clearly in trouble. Then last August the storm broke. Jet Airways delayed publishing its results. It blamed cut-throat local competition and rising fuel costs with a weakening rupee. It didn't help that the Indian revenue authorities were seeking significant sums in unpaid taxes. Goyal managed to negotiate refinancing with his banks which would have turned some of the airlines debt into equity. But the deal was reliant on a foreign investor, most obviously Jet's existing partner Etihad, in coming up with a fresh capital injection. But Etihad declined and no other outside carrier stepped forward. Last month, Goyal was forced to give up control of the airline that had propelled him to billionaire status. Hopes that, with the election looming, Prime Minister Narendra Modi might rush to rescue Jet came to nothing. Flights were cancelled as leasing companies retook possession of aircraft after Goyal defaulted on payments. The only reason the airline continued to operate at all until this month was the loyalty of staff, some of whom had gone unpaid for months. It might have been imagined that Goyal could have used his considerable wealth to reward those who had given him such loyal service. He may well have believed that fresh funds would become available and he could meet his obligations to staff. But when no new cash arrived the patience of his employees ran out. Unpaid pilots went on strike, effectively ending Jet Airway's operations. Business is like war - the struggle to beat competitors to come out on top. But like war, success depends on the loyalty of the foot soldiers involved in the struggle. They deserve loyalty in return. Now thousands of Jet Airways employees have lost their jobs and their livelihoods. It could be argued that tycoons like Goyal have a moral obligation here. They took the time and effort of trusting employees probably knowing full well they could not or would not pay for these. This is akin to outright theft. It is reprehensible. The once high-flying Goyal has had a major business humiliation but it seems very unlikely that he is going to suffer much financially. Meanwhile loyal employees who gave him years of service have lost everything.
