??Jet Airways’ Downfall Fuels Duopoly |????Vidyalaxmi Simplifies Student Loans

Market Watch

??Sensex was down 836.34 points or 1.04 per cent at 79,541.79, and the Nifty was down 284.70 points or 1.16 per cent at 24,199.30. About 1733 shares advanced, 2057 shares declined, and 93 shares were unchanged.

??All the sectoral indices ended in the red with auto, metal, power, telecom, pharma, and realty down 1-2 per cent.BSE Midcap and smallcap indices shed 0.5 per cent each. More than 240 stocks touched their 52-week high on the BSE

ICYMI

• ??????The Indian Navy, Coast Guard, and Air Force are set to begin the process of terminating contracts with Uber due to ongoing issues.
• ??????The Enforcement Directorate (ED) has launched nationwide searches on some Amazon and Flipkart sellers as part of a money laundering investigation.
• ????Actor Shah Rukh Khan has received a threat call from Chhattisgarh, leading to a case being filed by the Mumbai police.
• ????The BJP has advised Rahul Gandhi to examine the facts before making conclusions about the Congress leader’s recent article.
• ???????Amid Delhi's worsening air quality, the Centre has doubled fines on stubble burning by farmers to tackle pollution.
• ????Anil Ambani's Reliance Power has been banned for three years by SECI over compliance issues.
• ????Congress has announced five guarantees for Maharashtra, which includes a Rs 25 lakh health insurance scheme for residents.

??End of Jet Airways

The Supreme Court, exercising its plenary powers under Article 142, has ordered the liquidation of Jet Airways, citing the “peculiar and alarming” stagnation of its resolution plan.

• Highlighting the unresolved implementation of a strategy approved five years ago, the Court stated it had “no choice but to direct Jet Airways into liquidation.”
• Jet Airways, once a leading airline in India, faced severe financial distress due to mounting debts estimated at over ?8,500 crore.
• The airline's financial troubles began escalating significantly around 2011-12, culminating in its suspension of operations in April 2019 after failing to secure emergency funding from banks.

The reason behind the fall: The acquisition of Air Sahara in 2006 for $500 million is often cited as a pivotal mistake. This decision strained Jet's finances and was criticized internally as being excessively costly.

• Following the acquisition, Jet Airways rebranded Air Sahara as "JetLite," but this move did not yield the expected financial benefits. Instead, it led to substantial losses, with Jet Airways eventually writing off its entire investment in JetLite by 2015.
• Additionally, Jet's management underestimated the growing competition from low-cost carriers like IndiGo and SpiceJet, which captured market share by offering lower fares.
• Jet Airways suffered from poor corporate governance, with excessive control held by founder Naresh Goyal. His reluctance to accept outside investment and failure to adapt to changing market dynamics contributed significantly to the airline's decline.
• Despite offers from Tata Group and others for strategic partnerships or investments, Goyal's management style and decision-making processes hindered recovery efforts.

Rise of duopoly in the Indian market? IndiGo and Tata Group (which includes Vistara now merged with Air India and Air Asia) collectively control approximately 85% of the Indian aviation market.

• IndiGo alone accounts for over 60% of domestic air travel, significantly outpacing its nearest competitor, Air India, which holds around 9.4% of the market share. This dominance allows these airlines considerable pricing power, potentially leading to higher airfares.
• For instance, around 800 out of 1,100 air routes are classified as monopoly routes, with IndiGo operating the majority of these flights. The reduction in competition has led to significant fare increases on many routes. The Indian government is trying to tackle this duopoly through its Udan scheme explained further in the newsletter.

Other players, like SpiceJet and Akasa Air, are also not doing that well in the market with each holding 5.4% and 4.8% market share respectively.

• SpiceJet's operational fleet has shrunk from 74 aircraft in 2019 to just 28 in 2024, with 36 aircraft grounded due to non-payment of dues and financial constraints. SpiceJet is grappling with outstanding liabilities of approximately ?3,700 crore to aircraft lessors and other creditors, along with ?650 crore in statutory dues.
• Akasa Air, a comparatively new player in the market recently placed an order for 226 Boeing 737 MAX planes, with plans to add over 200 aircraft to its fleet in the next eight years. The airline currently operates 24 aircraft and has plans to increase this number rapidly.
• Furthermore, Akasa Air aims to raise around $1 billion in debt and equity over the next three years to support its expansion plans. The airline has also successfully catered to niche markets, such as travellers with pets, enhancing its appeal among specific customer segments.

Here’s an initial two-year comparison of major airlines:

New players through the UDAN scheme: Under the UDAN (Ude Desh ka Aam Nagrik) scheme, various new airline companies have emerged to improve regional connectivity across India.

• Notable entrants include Air Odisha, awarded routes in the scheme's initial rounds and primarily serving eastern and central India; Air Deccan, a relaunch of the original airline aiming to provide affordable air travel to underserved regions; Turbo Megha Airways, which operates in southern India, focusing on tier-2 and tier-3 cities; and Alliance Air, a subsidiary of Air India that connects smaller airports to major hubs. Additionally, the scheme now supports seaplane operations to connect remote coastal areas.
• The revamped UDAN scheme encourages the participation of new airlines and helicopter operators by simplifying the bidding process and enhancing financial incentives, including subsidies through Viability Gap Funding (VGF) to cover operational costs.
• Key features of the scheme include capped fares, where at least 50% of seats on UDAN flights are offered at subsidized rates, and operational support, with concessions like waived landing and parking charges at participating airports.

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????Higher Education through the Vidyalaxmi scheme

The scheme provides collateral-free and guarantor-free loans up to ?10 lakh for students enrolled in designated Quality Higher Education Institutions (QHEIs), offering crucial support for those lacking assets or guarantors.

• An interest subvention benefit is available for students with annual family incomes up to ?8 lakh, granting a 3% subsidy on loans up to ?10 lakh.
• Additionally, students with family incomes up to ?4.5 lakh receive full interest subvention during the moratorium period on their loans.
• The scheme specifically targets institutions within the top 100 of the National Institutional Ranking Framework (NIRF), state government institutions ranked 101-200, and all central government institutions. Currently, 860 qualifying QHEIs are included, potentially supporting over 22 lakh students each year. You can check the top 100 NIRF colleges here.
• To know the list of banks or apply for the Vidyalaxmi scheme you can click on the respective links to be redirected to the government’s portal.

UGC Chairman explains the PM-Vidyalaxmi scheme??

How to apply: The PM Vidyalaxmi Scheme will be implemented through a unified digital portal, simplifying the application process for students seeking loans and interest subventions while enhancing transparency.

• For loans up to ?7.5 lakh, the government provides a 75% credit guarantee on outstanding defaults, encouraging banks to offer educational loans under the scheme.
• Financially, the government has allocated approximately ?3,600 crore for the scheme's implementation from 2024-25 to 2030-31, aiming to support around 1 lakh students annually.

Union Minister Ashwini Vaishnaw??:

What’s happening | QUAD 2025 in India

• The 2025 Quad Summit was initially scheduled for September in New Delhi but moved to New York due to scheduling conflicts among leaders.
• Following a request from the US to host it this year, India agreed to host the Quad Summit in 2025.

Hi, I’m Aniket Mishra, the editor of this newsletter. I’d love to hear some feedback on the newsletter. WhatsApp me directly and tell me what you think.