Here are the top 10 developments in this big story:
"Despite its very best efforts, the airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations" Jet said in a statement, adding it was "confident that we will be back". A Mumbai-Amritsar flight will be its last for now, sources said.
"Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding," a bank source directly involved in Jet's debt resolution process told news agency Reuters.
Jet Airways, which also owes lessors, suppliers, pilots and oil companies, has been haemorrhaging planes in recent weeks as its lessors have scrambled to de-register and take back aircraft even as Jet's lenders have sought expressions of interest from investors interested in turning it around.
Jet's creditors, led by SBI, want a new investor to acquire a stake of up to 75 percent and initial expressions of interest were submitted last week.
A year ago Jet had more than 120 planes operating, but the full-service airline has been hit by competition from low-cost carriers such as IndiGo and SpiceJet, along with high oil prices, fuel taxes and a weak rupee.
The Indian market is highly price-sensitive, and airlines compete to keep fares low, even at a loss, to continue expanding. The domestic market has seen around 20 percent growth in the number of passengers over the past few years.
The fall of Jet has already drawn parallels to Kingfisher Airlines which wound up operations in 2012, costing thousands of jobs and crores of rupees in losses to it lenders and lessors.
The crisis at Jet has hit its employees hard with hundreds not getting paid for months. The pilots of the airline appealed to Prime Minister Narendra Modi this week, saying that 20,000 jobs were on the line if the airline went under.
On Tuesday, Jet Airways founder Naresh Goyal, who along with his wife Anita stepped down from the airline's board last month, announced that he had decided not to bid for acquiring a stake in the cash-strapped airline.
The news of Jet Airways stopping its operations for now came on a day that aviation regulator DGCA ordered a safety audit of IndiGo, India's largest airline which operates the A-320 NEO aircraft which has faced numerous engine issues with its next-generation Pratt & Whitney engines.