The collapse of Jet Airways Ltd (estb. 1994) is a latter day morality tale of the rise and fall of Naresh Goyal, founder-chairman of this crashed airline. Right from the start there was considerable speculation about how Goyal, given his modest background as travel agent, was able to pay for his 60 percent equity stake in Tailwinds, the promoter company registered in the Isle of Man, a tax haven off Ireland. The consensus of opinion was that Goyal was the frontman of Gulf Air and Kuwait Airways which owned 20 percent each of the airline. In 1997, Goyal, a master of manipulating official civilian aviation policy, persuaded the pliable Janata Dal coalition government at the Centre to ban all foreign investment in civil aviation and cheaply bought out the Middle East airlines. Thus far, every attempt by government and the media to discover the original owners of Jet has been defeated by the secrecy laws of the Isle of Man.
In 2004, Jet Airways launched a public IPO which was heavily over-subscribed transforming Goyal into a billionaire. But in 2007, Goyal made a foolish decision to acquire the failing Air Sahara airline for a massive $200 million (Rs.1,393 crore). In 2013, Goyal once again influenced a policy change in Delhi which permitted the Abu Dhabi-based Etihad Airways to invest $379 million (Rs.2,641 crore) in Jet Airways. At that time, the understanding was that Goyal would step down as CEO and let the professional management of Etihad take over Jet’s operations. Once again, Goyal betrayed his partner airline and stuck on as CEO, crash-landing the company into bankruptcy.
The moral of the decline and fall story of Naresh Goyal is that a reputation for trustworthiness is critical for business success. There are too many too-clever-by-half businessmen in India Inc who break promises and manipulate corrupt politicians without compunction and don’t honour their unwritten IOUs. Inevitably, nemesis catches up with them, as it did with Naresh Goyal.