Aviation

No More Jet Airways. Supreme Court Says “No Choice”, Orders Liquidation

Jet Airways was once one of India’s leading airlines, known for its service and extensive network. Founded in 1993, it served millions of passengers, connecting cities across India and international destinations.

However, since grounding its flights in April 2019, Jet Airways has struggled to navigate financial turbulence, leading to years of efforts to revive the airline and return it to the skies.

On Thursday, the Supreme Court ordered the liquidation of Jet Airways, citing “no choice” but to take this decisive step after the resolution plan failed to meet creditor obligations. The court invoked its extraordinary powers under Article 142, which allows it to make orders for “complete justice” in any case, overriding previous tribunal rulings.

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The Jalan-Kalrock Consortium (JKC), which had won the bid to revive Jet, faced criticism for not fulfilling payment commitments to creditors, which included major banks like the State Bank of India and Punjab National Bank.

The Supreme Court’s ruling pointed to “peculiar and alarming” issues surrounding the resolution plan’s implementation, leading to its conclusion that liquidation was the only feasible outcome.

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Chief Justice DY Chandrachud, alongside Justices JB Pardiwala and Manoj Misra, emphasized that while liquidation should be a last resort, it was necessary as the resolution plan was “no longer capable of implementation.”

In line with this decision, the court ordered that the ₹200 crore already infused by JKC be forfeited and directed the National Company Law Appellate Tribunal (NCLAT) in Mumbai to appoint a liquidator to oversee the process.

JKC, a partnership between Murari Jalan, a UAE-based Indian entrepreneur, and Florian Fritsch, a Jet shareholder through Kalrock Capital Partners Limited, had taken ownership of Jet Airways two years after it was grounded. The consortium’s inability to fulfill its financial obligations has now led to this final verdict, marking the end of an era for Jet Airways in India.

Aviation

Why Embraer’s E175-E2 Faces Challenges in the U.S. Market

Embraer, a renowned Brazilian aircraft manufacturer, has a strong reputation for building regional jets that connect smaller cities worldwide.

While its aircraft are widely used in various countries, the United States imposes restrictions on certain Embraer models, particularly the E175-E2. In this article, we’ll explore why this aircraft is blocked from entering the U.S. market.

The Embraer E175 vs. E175-E2

The E175 is allowed in the U.S. and is a popular choice for regional airlines operating short-haul routes.
The E175-E2, a more advanced and fuel-efficient version, faces restrictions due to scope clauses.

1. Scope Clause Restrictions

Scope clauses are agreements between major U.S. airlines and pilot unions that limit the size and weight of aircraft used by regional carriers.

These clauses cap the maximum takeoff weight (MTOW) at 86,000 pounds.
The E175-E2 exceeds this limit with an MTOW of 98,120 pounds (44,600 kg), making it ineligible for regional operations.

2. Fleet Compatibility

U.S. regional carriers typically operate under agreements that favor aircraft compliant with scope clauses.

The original E175 meets these criteria, making it easier to integrate into existing fleets.
The E175-E2, despite its improved efficiency and longer range, is considered incompatible with current contracts.
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3. Market Dynamics

Modifying scope clauses would require complex negotiations between airlines and pilot unions, a process that can be time-consuming and contentious.

Major airlines have shown little interest in pushing for these changes, especially with other compliant aircraft available.
The lack of demand has led Embraer to suspend the development of the E175-E2 in February 2022.

Similar Challenges Faced by Competitors

Embraer isn’t the only manufacturer affected by scope clauses.

Mitsubishi’s SpaceJet program was similarly halted in 2023 due to the same restrictions.
Larger regional aircraft like the E190-E2 (MTOW: 124,340 lbs) are also excluded from regional contracts, further limiting options.
In the U.S., airline and pilot union agreements restrict regional carriers to aircraft with a maximum of 76 seats or a maximum takeoff weight (MTOW) of 86,000 pounds (39,000 kg).
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The Embraer E175-E2, however, exceeds these limits, offering seating for up to 90 passengers in a single-class layout and an MTOW of 98,120 pounds (44,600 kg).
Due to these restrictions, Embraer suspended the E175-E2 program in February 2022, citing scope clause limitations as the primary reason for pausing development.

The Decline of Small Regional Jets

The U.S. market is shifting away from smaller, 50-seat regional jets.

In 2019, there were 660 active 50-seat regional jets.
By November 2024, this number had dropped to 260, creating a gap in the regional aviation market that remains unfilled.

Impact on U.S. Aviation

The inability to introduce newer, more efficient regional jets like the E175-E2 is impacting both airlines and manufacturers:

U.S. airlines must adjust flight routes and seating configurations to accommodate older aircraft models.
Boeing, a domestic competitor, also faces challenges as demand shifts towards larger aircraft, reducing regional jet sales.

Conclusion

While the E175-E2 is permitted and operational in many countries, it remains blocked in the U.S. due to regulatory limitations. This situation highlights the pressures faced by domestic manufacturers and airlines as they struggle to balance efficiency, regulations, and market demands.

What do you think about these restrictions? Should the U.S. update its scope clauses to allow more advanced regional aircraft? Share your thoughts in the comments!