Strategic Management of Jet Airways
Strategic Management of Jet Airways
Strategic Management of Jet Airways
MANAGEMENT OF
JET AIRWAYS
1. INTRODUCTION
Jet Airways is a major Indian airline based in Mumbai. It was founded on 1 April, 1992.
However, it commenced its operation since 5 May, 1993. It is the second largest airline in
India, both in terms of market share and passengers carried, after IndiGo. It operates over
300 flights daily to 74 destinations worldwide. Its main hub is Mumbai, with secondary hubs
at Delhi, Kolkata, Chennai, Bengaluru.
Jet Airways (India) has India covered, flying to about 45 destinations throughout the
country from its primary hub in Mumbai and several secondary hubs. The airline operates a
fleet of more than 85 aircraft, mostly Boeing 737s. Besides domestic service, Jet Airways
flies to about 20 cities in Asia, Europe and North America. It extends its offerings via codesharing relationships with carriers such as Qantas and Brussels Airlines. (Code-sharing
enables airlines to sell tickets on one another's flights and thus offer potential passengers
service to additional markets.) Subsidiary JetLite serves about 30 destinations, mostly in
India. Jet Airways was founded in 1993 and is controlled by Chairman Naresh Goyal.
History
Early years:
Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started Indian
commercial airline operations on 5 May 1993 with a fleet of four leased Boeing 737-300
aircraft. In January 1994 a change in the law enabled Jet Airways to apply for scheduled
airline status, which was granted on 4 January 1995. It began international operations to Sri
Lanka in March 2004. The company is listed on the Bombay Stock Exchange, but 80% of its
stock is controlled by Naresh Goyal (through his ownership of Jets parent company,
Tailwinds). It has 10,017 employees (as at March 2007).
Naresh Goyal who already owned Jetair (Private) Limited, which provided sales and
marketing for foreign airlines in India set up Jet Airways as a fullservice scheduled airline
to compete against state-owned Indian Airlines. Indian Airlines had enjoyed a monopoly in
the domestic market between 1953, when all major Indian air transport providers were
nationalised under the Air Corporations Act (1953), and January 1994, when the Air
Corporations Act was repealed, following which Jet Airways received scheduled airline
status.
AIR SAHARA BUYOUT:
In January 2006 Jet Airways announced that it would buy Air Sahara for US$500 million in
an all-cash deal, making it the biggest takeover in Indian aviation history. It would have
resulted to the country's largest airline but the deal fell through in June 2006. On 12 April
2007 Jet Airways agreed to buy out Air Sahara for INR14.5 billion (US$340 million). Air
Sahara was renamed JetLite, and was marketed between a low-cost carrier and a full service
airline. In August 2008 Jet Airways announced its plans to completely integrate JetLite into
Jet Airways. Present In October 2008 Jet Airways laid off 1,900 of its employees, resulting in
the largest lay-off in the history of Indian aviation. However the employees were later asked
to return to work; Civil Aviation Minister Praful Patel said that the management reviewed its
decision after he analysed the decision with them. In October 2008 Jet Airways and rival
Kingfisher Airlines announced an alliance which primarily includes an agreement on codesharing on both domestic and international flights, joint fuel management to reduce expenses,
common ground handling, and joint utilisation of crew and sharing of similar frequent flier
programmes. On 8 May 2009 Jet Airways launched its low-cost brand, Jet Konnect. The
decision to launch a new brand instead of expanding the JetLite network was taken after
considering the regulatory delays involved in transferring aircraft from Jet Airways to JetLite,
as the two have different operator codes. The brand was launched on sectors that had 50% or
less load factor with the aim of increasing it to 70% and above. Jet officials said that the
brand would cease to exist once the demand for the regular Jet Airways increases. According
to a PTI report, for the third quarter of 2010, Jet Airways (Jet+JetLite) had a market share of
26.9% in terms of passengers carried, thus making it a market leader in India, followed by
Kingfisher Airlines with 19.9%.
Jet Airways in the EU:
Jet Airways entered the EU with its maiden flight to London in May 2005.2 In the quarter
ending 30 June 2006, the company generated two-thirds of its international revenues from its
London operations. The company has its airline reservation and ticketing offices at London in
the UK and Brussels in Belgium. Recently, it has also entered into a reciprocal Frequent Flier
Program (FFP) partnership with Lufthansa Airlines, SWISS and Austrian Airlines. Jet
Airways has its reservations and ticketing offices/GSA offices in Austria, Belgium, Cyprus,
the Czech Republic, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland,
Portugal, Spain and Sweden.
Jet Airways in UK:
Jet Airways operates flights to London from Mumbai, Delhi and Amritsar in India. On this
route, the company has acquired a 20-per cent market share with a load factor of over 70 per
cent. Factors for Success India An Investment Destination India is emerging as a preferred
investment destination for various industries that are planning to expand their operations. The
investment by foreign firms in India is increasing at a brisk pace as a result of the countrys
low labour costs and the availability of talented professionals. Various European firms are
scouting for alliances with Indian companies. This has increased the air traffic to India, and
Jet Airways is capitalising on this opportunity to expand its international operations to the EU
and other regions.
Tapping the NRI Market:
With its international operations, Jet Airways has tapped the large nonresident Indians (NRIs)
segment that resides in the USA and Europe. The companys advantage of being an early
entrant has helped it in tapping this segment. It is leveraging its established brand name in the
domestic market, and has developed a good hold in the market abroad.
Favourable Government Reforms:
The new reforms introduced by the Indian government have provided momentum to the
growth of Jet Airways. Reforms, such as liberalisation of international skies (permission to
fly to certain international destinations) for private domestic airlines, abolishing Foreign
Travel Tax, reducing excise duty on air turbine fuel (ATF) from 16 per cent to 8 per cent and
increasing foreign investment limit from 40 per cent to 49 per cent, have promoted Jet
Airways growth in international operations.
Tourism Driving the Growth:
The growth in international air traffic to India. Growing at a considerable pace, the travel and
tourism expenditure is estimated to register a CAGR of 8.8 per cent for the decade starting
from 2004 onwards. In 2005, 33 per cent of tourists in India were from the UK and the US.
Almost 255,000 tourists annually visit India from the UK, the primary reason being the
strong cultural links between the two nations. A healthy growth of the Indian tourism industry
has also helped Jet Airways to increase its international operations. Future Plans-Expanding
Current Markets Jet Airways has plans to expand its existing international operations in the
UK and Asia. It plans to increase the frequency of flights to the existing destinations and also
start operations to new destinations. It would strengthen its overall network by supporting its
international operations through its already established domestic network.
Ambitious Expansion Plans:
Jet Airways has plans of ambitious international expansions in the future with estimated
capital expenditure of approximately EUR 2 billion over the next three to five years for 30
additional wide body and narrow body aircraft. It is expected to increase its fleet size from 53
aircraft in FY 2006 to 79 aircraft by FY08. Most of the purchased aircraft will be used on
international routes. The management also plans to develop its own maintenance hangars and
a pilot training centre. It plans to launch air services to key destinations across the world
including USA, Canada, UK, South Africa, Kenya, Mauritius, points in China and South East
Asia and some points in Europe like Brussels, Rome and Zurich.
MISSION:
Jet Airways will be the most preferred domestic airline in India. It will be the
automatic first choice carrier for the travelling public and set standards, which other
Vision Statement:
Organization vision is to become the Best Airline in the World. Company
Perspectives Jet Airways will be the most preferred domestic airline in India. It
will be the automatic first choice carrier for the travelling public and set
standards, which other competing airlines will seek to match. Jet Airways will
achieve this pre-eminent position by offering a high quality of service and
reliable, comfortable and efficient operations. Jet Airways will be an airline, which
is going to upgrade the concept of domestic airline travel be a world-class
domestic airline
million). Air Sahara was renamed JetLite, and was marketed between a low-cost carrier and a
full service airline.
In August 2008 Jet Airways announced its plans to completely integrate JetLite into Jet
Airways
India is one of the largest and fastest-growing markets in the world. Through this
association, Jet Airways and Etihad Airways will both be strengthened as will be the
economies of India and the UAE.
Etihad Airways and Jet Airways will combine their network of 130 destinations, with Jet
Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad
Airways growing global network
Under the strategic partnership, both airlines will gradually expand existing operations and
introduce new routes between India and Abu Dhabi thus providing an ever wider choice to
the travelling public.
KEY STRATEGIES:
Keep operations and growth in line with expected Indian economy growth which is around
7% 8% per annum
Manage risk & short term crisis on account of any global financial risks
Manage short term spike in crude oil prices.
Minimize passing the fuel price fluctuation to customers.
Network expansion will be around the key focus specially Gulf and Middle East
Focus on improving service, reliability and on time performance
Focus to be the best in no frills sector.
Measures to negate effect of unprecedented increase in prices of fuel
Maintain its leadership position in the Indian aviation industry
Improve On-time performance it was 88.4% for Jet Airways for the financial year 2010-11
Explore the potential for sustained growth in Indian passenger traffic because of low
penetration in the medium to long term.
COMPETITORS:
Jet Airways is an international airline so there are many rival airlines at both level i.e.
international and domestic level.
1. Domestic Competitors
Indigo
Go Air
Spice Jet
Air India
2. International Competitors
British Airways
Delta Airlines
United Airline
Southwest Airlines
American Airlines
China Sothern Airlines
US Airways
Ryanair
Lufthansa
China Eastern Airlines
Air China
Best First Class Service in the World award at Business Traveller's 20th annual 'Best
in Business Travel' awards
Best Business Class & Best Economy Class at the Business Traveller Awards
Best Elite Level for the second year in a row, at the 21st Annual presentation ceremony
of the Freddie Awards 2008
Best Cargo Airline of North Asia by Cargo Airline of the Year Awards
Best Domestic Airline award for the 1st consecutive year and the 5th time in the past two
years at the 18th TTG (Travel Trade Gazette) Travel Awards 2007
India's Most Respected Company in the Travel and Food Sector by Businessworld 2003
Best Long Haul Carrier ex-Brussels award at the Tm Travel Awards 2009.
Best Eastbound Airline from India and Best domestic Airline in India awards at the
Abacus Tafi Awards 2009.
SWOT Analysis
Each and every company have certain strength, weakness, opportunity and threats.
1. Strength
Strong presence & good name in the Indian Aviation market.
Taking the plane on lease rather than purchasing.
Readymade distribution network.
Innovation in services.
Experience exceeding 20 years.
Large fleet size.
Among top 3 in India
2. Weakness
Salaries was not high as compared to other airlines so difficulty to retain employees.
Financial not sound as compared to others airlines.
Loosing domestic market share.
Weak brand promotion.
Need improvement in in-flight services.
Old fleet average age 4.78 years.
3. Opportunity
2.
CSR
Jet Airways commenced its operations in May 1993. It is an airline that has pioneered
concepts like Through-Check-in, City Check-in, Web and Kiosk check-in, SMS check-in,
automated tickets at travel agency locations, e-ticketing, JetMobile and the unique five-tier
frequent flier programme JetPrivilege in India.
As an Indian Corporate Body, Jet Airways also recognises its responsibility to the Society and
Nation. Consequently, in 1998 Jet Airways launched its Yellow Rose campaign. People are
like roses, and like the flower they require friendship, warmth and caring. Jet Airways has
striven not only to extend these qualities to its guests, but also to the country in times of
crises or calamities.
Giving, to spread the message of love and care. Amongst several other activities organized,
one of them is Mumbai Darshan - a daylong city excursion for 170 students of a rural
residential school called Shrimad Rajchandra Gurukul located in the village of Karanjveri,
Dharampur.
It was a once in a lifetime opportunity for these rural students to visit Jet Airways aircraft
maintenance hangar near the Chhatrapati Shivaji International Airport, Santacruz. The visit to
the hangar was organised by JetSpark, an exclusive initiative of the airline to connect with its
young travelers, in association with Shrimad Rajchandra Love and Care to open up the world
of aviation to these children.
At a half-day event held at the airlines hangar, the children were given an opportunity to
explore a Boeing 737-700 aircraft parked in the hangar, spending more than three hours
learning and understanding the working of the aircraft. The children were also shown the
interior of the Jet Airways aircraft cockpit, the cargo hold, airline maintenance and landing
gear operations. The children interacted with Jet Airways Engineers, Pilot and Cabin Crew.
They also observed the landing and take-off of various planes at the Airport. The children
were later taken for a visit to the engine, structure, brake & wheel and seat shops, with this
educational excursion by the engineers providing the children with rich insights into airline
maintenance and operations.
Radio City, Times of India and Ahmedabad Times are taking the initiative to impart
awareness of this blood donation camp.
Commenting on this initiative, Mr. Wolfgang Prock-Schauer, CEO, Jet Airways, said, "Jet
Airways is delighted in associating with this worthy cause. The airline always endeavours to
be a socially responsible corporate body, and this initiative is a step in that direction."
Another unique project of Save the Children is to respond and build confidence among
pregnant women who are HIV positive with a view to decreasing the infant mortality rate.
As a continuing effort through February and March 2001 all contributions by passengers to
Jet Airways' unique inflight Magic Box collection were directed through Save the Children
organisation to the benefit of children rendered homeless and orphaned by the Gujarat quake.
Jet Airways has contributed Rs.50 lakhs to the Prime Minister's Relief Fund for rehabilitation
of the Tsunami victims of India. The Airline has also made a contribution of USD 55,000 for
similar efforts in the Island Nation of Sri Lanka to the President's Relief Fund.Additionally,
approximately 7,000 employees of Jet Airways have contributed one day's salary for relief
efforts of the Tsunami victims of the coastal areas of India.
medical and relief supplies. A Crisis Coordination Committee headed by Jet Airways Vice
President, Support Services was constituted in the wake of one of post-independent India's
unprecedented calamities to monitor operation of special flights.
The 15-ft X 10-ft tents set up to provide accommodation to the quake affected people,
comprised of a pre-fabricated steel structure that could be assembled in a matter of an hour
and a half. The roofing was double layered with the inner layer made of bamboo mats and the
top covered with mud-coated tarpaulin. This combination provided insulation against the
extreme temperatures of the Kutch region. A door was provided in the front part with
provision for ventilation in the rear.
Well-known Indian architect P.K. Das designed the tents, with active involvement of Mumbai
based Council of Architecture. The cost of each tent, including transportation and installation,
was Rs.6, 500.
Fabricated in Mumbai and Ahmedabad, the tents were designed so that they did not require a
change of canvas for two years. Designed to provide shelter till the villagers were able to
reconstruct their homes, these tents will also serve as emergency shelters during any future
calamity. In brief, this also constituted building up of a bank of emergency shelters in a
region prone to cyclones and earthquakes. Jet Airways, therefore, considered this as an
investment for the future too. Alternatively the tents can also be used as storage or cattle
sheds once the villagers have moved to their reconstructed homes.
Between January 27 and February 4, 2001 the airline, apart from the daily Mumbai-BhujMumbai flights, operated seven additional flights to facilitate transportation of relatives of
victims and representatives from relief organisations to reach Bhuj, and also carried over 60
tonnes of relief cargo including foodstuffs, blankets, medicines and rescue equipment. All
flights operated with a full complement of passengers and cargo.
Jet Airways cargo offices through its route network were instructed to accept all relief
material from recognised governmental and non-governmental agencies for urgent despatch
to Gujarat. The relatives of the victims carried relief material and no excess baggage was
charged towards the same.
Also, the over 4,000 employees of Jet Airways voluntarily contributed a days' salary for the
month of February 2001 for rehabilitation of Gujarat victims.
Jet Airways has engaged the services of Shraddha Charitable Trust - a registered NGO who
train and provide post school vocation to their mentally challenged and autistic young wards.
The airline has chosen and placed bulk orders for one of the Trust's in-house products - a
napkin cords made of jute, exclusively for their Premire Class service on their long-haul
international flights to London on board the Airbus 340-300 E aircraft.
While being eco-friendly, the fabrication of this Napkin Cord entails100% involvement of
both high and low performing students. Jet Airways is proud to be associated with Shraddha,
and to be able to showcase and support the skills of these special children.
Proceeds from sales of these products form a stipend for their special employees. This helps
to generate a sense of fulfilment and self-reliance for these children.
Special employees are taught to master simple skills like pasting, folding, assembling, etc.
These skills are then applied by these special employees to create eco-friendly innovative
products made from jute, bamboo, dried leaves etc. and are sold through NGO fairs and
exhibitions.
Since inception, Jet Airways has been participating in community building and lending
support to various NGOs, as part of an on-going programme of Corporate Social
Responsibility.
Save the Children, include pre-schools for the urban slum children in Mumbai and a special
care centre for the intellectually impaired and speech and hearing impaired. Another unique
project of Save the Children is to respond and build confidence among pregnant women who
are HIV positive with a view to decreasing the infant mortality rate.
Other Activities:
Every year, Jet Airways, together with various NGOs organises one or two "Flights of
Fantasy" for the underprivileged children. Under this unique initiative, children belonging to
underprivileged sections of Society are initiated into the world of aviation through special
dream flights. Together with NGOs, corporate partners are also involved. Jet Airways has
conducted several such flights at Mumbai and Chennai.
With effect from July 2005, Jet Airways commenced operating military charters for the
Indian Army to transport troops to Thoise to facilitate the travel of military personnel
stationed in Siachen.
On January 15, 2006, a team of 30 Jet Airways employees participated in the Standard
Chartered Mumbai Marathon 2006 to raise funds for the children of 'Magic Bus' an NGO that
uses sports to change the lives of the city's most at-risk children. As an Indian operator, Jet
Airways would be proud to be of service to the country in any other manner if necessary.
5. Conclusions
I would like to conclude that Jet Airways Company which is providing Services should
increase its Overseas routes to get full fledge global recognition, and more over the services
offered by jet airways should be improved in terms of quality. Finally this is a very great
company because in recession also jet airways stood up strongly in the market and it created
trusty image in the minds of investors and also it acts as the core competitor for all other
aviation companies in Recession period.
Bibliography of SM
http://www.jetairways.com/EN/IN/JetExperience/corporate-profile.aspx