Short case study on Jet airways
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Jet Airways was founded in 1993 and grew to become India's largest private airline, but faced financial troubles and ceased operations in 2019. It was acquired in 2020 by a consortium aiming to relaunch flights. Key reasons for Jet Airways' failure include the expensive acquisition of Sahara Airlines, high costs of operating as a full-service carrier, and accumulating large amounts of debt. The new owners plan to restart Jet Airways with a fleet of over 25 aircraft serving routes to CIS and EU countries.
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Short case study on Jet airways
- 1. CASE STUDY ON JET AIRWAYS Submitted to Prof. Vivek Sane INDEX 1 Brief 2 Historyof JetAirways 3 JetAirwaysPresently 4 ReasonsforFailure of JetAirways 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 14th 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 17th 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 failureof 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