Former Jet Airways Director Accused Of Fraud Amounting To $7 Million

Advertisement:

The former owner of Jet Airways and his wife have been accused defrauding Mumbai-based travel agency Akbar Travels for a total of 500 million rupees ($6.9 million). The Mumbai Police confirmed that the travel agency lodged a criminal complaint against the couple who stepped down from Jet Airways in March last year.

Jet Airways chairman goyal getty images
Former chairman Naresh Goyal and his wife have been accused of fraud. Photo: Getty Images

Criminal charges

Jet Airways’ former director Naresh Goyal and his wife Anita are facing charges brought by police in Mumbai regarding their assurances to a travel agency that the airline was not suffering financially. According to the travel agency, Jet Airways lied about its financial status and told the travel agency it would not suffer any losses.

Akbar Travels claims it would not have continued to sell tickets at a discounted price if it knew the extent of the airline’s problems. From January 2019, flights began to be canceled by Jet Airways but the agency was still being assured that everything fine. It also claims that money was never returned to the agency after flights were canceled.

Deputy Police Commissioner of the Mumbai City police confirmed that, following an order from the metropolitan magistrate in Mumbai on the 18th February, the Chief Financial Officer at Akbar Travels had officially lodged the complaint. The committee of creditors responsible for Jet Airways has extended the deadline for the submission of bids to buy the defunct airline until the 10th March 2020.

The collapse of Jet Airways

After 26 years at the head of the airline he founded, Mr. Goyal and his wife Anita stepped down from the Jet Airways board on 25th March 2019 when a consortium of lenders took over. The airline was out of money.

The first sign of trouble at the airline came when Jet Airways was unable to pay leasing companies. The grounded planes signaled the start of a downward spiral. Flights were canceled, income was cut and costs still soared.

Advertisement:
Jet airways grounded planes getty images
Jet Airways was forced to ground planes after it could pay lessors. Photo: Getty Images

Finally, the airline collapsed on 17th April and a rescue plan was put into action. Jet Airways was reliant on the banks for support. But the rescue plan was never put into action because no one could see the long-term feasibility of the airline. At the end of 2019, the airline had accrued a total debt of over 250 billion rupees ($3.5 billion).

Why did Jet Airways collapse?

In April last year, the banks decided that Jet Airways wasn’t worth rescuing and they let it collapse. The airline no longer reflected the demands of the Indian aviation market.

Advertisement:

Jet thrived in the 1990s as a provider of premium service and built a great reputation. However, with the introduction of new, low-cost carriers such as SpiceJet and IndiGo, the airline could no longer compete. With the rising cost of fuel and the cheaper alternative airlines thriving, Jet Airways just wasn’t financially viable.

IndiGo SpiceJet Getty Images
The rise of low-cost carriers such as SpiceJet and IndiGo contributed to the downfall of Jet Airways. Photo Getty Images

Many blame mismanagement and malpractice from the Goyals as a key reason why the airline went bankrupt. Although this fraud claim by Akbar Travels is new, the couple have been plagued by rumors for over a year. The couple were banned from leaving India in May 2019 due to ongoing investigations.

As the investigations and fraud claims continue, we will no doubt continue to see the Goyals’ name linked to the downfall of one of India’s premium airlines.

Advertisement:
21 Shares: