Short case study on Jet airways

Case Study On Jet Airways by Sudhanshu Malewar.

1. CASE STUDY ON JET AIRWAYS
Submitted to Prof. Vivek Sane


INDEX
1 Brief
2 History of Jet Airways
3 Jet Airways Presently
4 Reasons for Failure of Jet Airways
5 SWOT Analysis
MARCH 4, 2021
SUDHANSHU MALEWAR
Roll No: 8003 – M.com (Part 1) – Section A

2. 1


Synopsis: Despite all the Hurdles it faces, an airline with a cleaned-up balance sheet will be
more attractive to foreign investors in short term over likes of SpiceJet. Once it takes off, Jet
Airways has the potential to give more competition to an already-dominant IndiGo. But first,
much depends on how its incoming promoters manage to wade through current
proceedings.


Jet Airways History:

Naresh Goyal is a non-resident Indian (NRI) businessman and founder Chairman of Jet
Airways. He started operating Jet Airways in 1993, later the airline was granted a scheduled
airline status on 14
th
January 1995 and company got listed in year 2005.
In January 2006, Jet Airways announced its intention to acquire Air Sahara for US$500
million in an all-cash deal; however, the deal fell through in June 2006.
On 12 April 2007, the deal was back on track with Jet Airways agreeing to pay US$200 million.
From 2010 onwards, Jet Airways was the largest Commercial Passenger Airline in India with a
passenger market share of 22.6% with its competitors, mainly SpiceJet and IndiGo, lowering
ticket fares in the following years, it was forced to follow suit, hurting overall performance
resulting in steep financial losses.
Jet Airways is the second largest airlines in India as of 2016 report, in terms of passenger
market share. Jet Airways’ operating bases are Bengaluru, Chennai, Delhi, Kolkata and Pune.
Its hub is located in Mumbai. It has its own airport lounge under the name of ‘Jet Lounge’ and
it provides special benefits to its frequent flyers under the brand name of ‘Jet Privilege’. Jet
Airways also has alliance with Etihad Partners and the company’s current slogan is ‘The joy of
flying’.
It dropped to second place behind IndiGo in October 2017, with a passenger market share of
17.8%. The downward slide continued and resulted in bankruptcy. On 17
th
April 2019, ceased
all flight operations with its last revenue flight operated by a Jet Konnect Boeing 737 arriving
from Amritsar- Mumbai.



Jet Airways Presently:

In October 2020, Jet Airways is bought by UAE-based Entrepreneur Murari Lal Jalan with 51%
stake and UK-based Kalrock Capital to revive and operate the airline. UK-based Kalrock group
- a global firm operating in financial advisory and alternative asset management, is backed by
Fritsch, an investment group founded by serial entrepreneur Florian Fritsch, who has
partnered some of the most influential families and organisations. UAE-based Murari Lal
Jalan owns M J Developers, which has investments in diverse sectors like real estate, mining,
and construction globally.
Jet Airways plans to launch the airline in the June quarter in collaboration with the
Uzbekistan government. The airline will have more than 25 planes comprising Boeing
737Max, Airbus330 and Boeing 787-Dreamliner aircraft, and it will primarily cater to CIS
(Commonwealth of Independent States) and European Union.

3. 2


Reasons for the failure of Jet Airways:

1. Merger: The merger between Sahara Airlines and Jet Airways was a mistake on Jet
Airway’s part. Sahara was acquired by Jet Airways for $500 million which was way
above what the airline was actually worth.

2. Rebranding Sahara Airlines: Jet Airways renamed Sahara Airways as JetLite. Sahara at
the time was a powerhouse with its name on every Indian's tongue. The rebranding
cost Jet Airways a major chunk of its customers; flyers who were attracted towards
the Sahara brand image couldn't resonate with JetLite.

3. Mismanagement: Every company and organization rests on the abilities of its
management board. Naresh Goyal, the founder of Jet Airways, decided to become a
one-man army for Jet Airways and did not hire a sound management committee to
assist him in running the airline. Insiders often talk about his poor financial acumen.
He relied on a single management team for handling all the operations related to Jet.
Understanding that specialized teams are needed to run different departments is no
rocket science. And when you acquire one more airline, you can't rely on your existing
management board that's already burdened to take up additional responsibilities!

4. Full-service airline: Full service airlines offer passengers the choice of economy or
business class travel and premium economy and first class on some flights. The
company was operating as a full-service airline. Operating as a full-service airline in
India is not an easy task. One needs formidable financial support and customer
relationships. Catering to the wealthy, the middle class, and the lower sections of the
Indian society requires strategy and operational excellence beyond imagination. That
is why most of the company’s focus on the middle-class segment and keep the prices
as low as possible. Jet Airways was biting off more than it could chew.

5. Drowning in Debts: Jet Airways was never good with money. It kept on incurring debts
and spending more than its revenue. The employees were paid lavishly when
compared to the industry standards. For the sake of providing comfort and luxury, the
Naresh Goyal backed airline compromised with finances.


SWOT Analysis - Jet Airways
Strength
 Only private airline with operations on international routes
 High credibility and substantial brand value in the market
 Recognised for its quality and punctual services
 Extending fleet size to accommodate new demands.

4. 3

Weakness
 Underwhelming domestic market share
 The sudden transition to grab domestic market share when faced competition from low-
cost carriers
 High prices for economy class
 Not responding to the challenges of low-cost airlines in time
 Failing to understand Indian consumers’ mind-set.
Opportunities
 Domestic market
 Long haul flights
 Bankable and useful modern technology
 Comfortable and spacious plane seats

Threats
 Saturation in tourism
 Reduced fair but not considerably enough for middle-class
 Increasing wages, operational and overhead costs to maintain a fleet
 Competition from international carriers