Mukesh Ambani owns one of the world’s most expensive private jets and even gifted his wife an Airbus A319 for her birthday. Gautam Adani has three private jets, housed in a $50 million hangar.
Neither of them owns an airline, though.
It may seem facetious to say that India’s two wealthiest men are where they are on the rich list because they don’t own an airline business, but it’s unnervingly close to the truth.
Civil aviation is a notoriously fickle business, with a knack for gobbling up vast fortunes. When asked how to become a millionaire, Virgin Group founder and maverick billionaire Richard Branson – who pumped $260 million of his own funds into Virgin Atlantic and took on $1.5 billion in debt to keep it afloat in 2020 – quipped: “Start with a billion dollars. Then start an airline.”
But there’s something about seeing one’s colours on the bodies and tails of giant flying machines that seems to have an irresistible lure for the world’s wealthy entrepreneurs.
Reuters reports that Jindal Power, owned by the flamboyant, polo-playing billionaire Naveen Jindal, was the sole applicant whose ‘expression of interest’ – the first step before a financial bid is submitted – had been accepted by lenders of the bankrupt Go First. The Wadia Group airline had filed for insolvency in May after problems with its Pratt & Whitney engines grounded a majority of its fleet.
However, Jindal Power has clarified that while it is interested in acquiring smaller companies in other sectors through the insolvency route, its interest in Go First may not result in an actual bid.
There’s certainly room for another airline in India’s booming airline market, already the world’s third-largest and the fastest growing one globally. Passenger traffic has been growing at a compound annual growth rate (CAGR) of over 10% for the past decade – more than two and a half times the world average – according to Air India’s chief transformation officer Nipun Aggarwal.
More than 700 aircraft crowd the skies, with 1,200 more already on order. Go First’s abrupt exit left a 7% hole in the market, which has been widened by the troubles of low-cost carriers SpiceJet and Akasa Air (founded by yet another billionaire, the late stock market tycoon Rakesh Jhunjhunwala). India’s largest airline, Indigo, reported record profits last quarter thanks in part to Go First’s sudden exit. And despite surging fuel costs, which have forced Indigo to add a fuel surcharge to its fares, travellers are lining up.
Domestic traffic was up 19% year-on-year in September 2023, 7% higher than the pre-covid level for the same month, according to ratings agency ICRA. Despite airfares being up 30-40%, Mint reports that domestic airlines are expecting a record Q3.
So will Go First see a flock of suitors? It’s difficult to say. Aviation is an extremely volatile business and a single bad call can spell disaster. Jet Airways ruled Indian skies for a decade but an ill-advised move to acquire the debt-laden Sahara Airways marked the beginning of the end, comprehensively knocking founder Naresh Goyal comprehensively off the list in the process.
Excellence in another field does not automatically guarantee success in the airline business. Vijay Mallya was the uncrowned king of India’s vast liquor trade but Kingfisher Airlines turned him into a fugitive. Spicejet was launched by a successful businessman (BK Modi) and fell into the hands of a successful business house (the Marans of Sun TV) before landing in the lap of “turnaround specialist” Ajay Singh. Despite his track record in the business, Singh is struggling to keep the airline afloat.
It’s not for nothing that civil aviation is considered a billionaire’s graveyard. From the legendary Howard Hughes, who failed to keep TWA (Trans World Airlines) afloat to Donald Trump, who managed to beat all the odds to become president of the United States but failed in aviation with Trump Shuttle, many billionaires have bitten the dust. British baron Sir Freddie Laker, who invented the concept of low-cost carriers, launched Skytrain and Laker Airlines, both of which went bust.
Any potential buyer would have to put together a world class team of professionals to run the airline. Even then, things may not work out. Take Akasa Air, whose founding team includes aviation leaders such as former Indigo chief Aditya Ghosh and former Jet Airways CEO Vinay Dube. India’s newest airline was increasing its market share ranks before it got unseated by a sudden exodus of pilots, leading to an ugly court dispute.
Global talent is plentiful, thanks to the churn in the sector worldwide, but that alone does not ensure success. After all, even Go First had a succession of top-notch expat professionals at the helm. It all comes down to the management style, and how willing the owners are to give the professionals free reign.
