Jet Airways: Can it Fly Again?
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Case Code: BSTR606 Case Length: 25 Pages Period: 1992-2019 Pub Date: 2020 Teaching Note: Available |
Price: Rs.500 Organization: Jet Airways Industry: Aviation Countries: India Themes: Aviation Business in India, Indian aviation industry |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Inception of Jet Airways
A recipient of numerous business and leadership honors and prizes, Naresh Goyal (Naresh) founder of Jet Airways (India) Private Limited (Jet Airways), India’s leading private airline, completed his graduation in the year 1967.Aged 18, he joined as a general sales agent for the Lebanese International Airlines. From 1967 to 1974, Naresh learned the intricacies of the travel business through his association with various foreign airlines...
Naresh Goyal – Birth of an Aviation Icon
It had oftentimes been said that a ‘typical characteristic of successful business leaders is that they know how to surround themselves with good people.’ Naresh was one who subscribed to that philosophy. When he founded Jet Airways, he recognized that it was important to bring in foreign expertise. Consequently, from the inception of the airline, he hired executives from international airlines to bring in different perspectives in the management of the company. Naresh also chose to appoint board members who had many years of industry experiences and expertise, also from across the world...
Indian Aviation Market 2000 – 2010
The year 2003 marked a turning point in the history of civil aviation in India with the entry of low-cost carriers (LCCs) such as Air Deccan and SpiceJet. This was followed by the entry of other private airlines, large and small, including Kingfisher Airlines and Go Air .The cost of traveling by air became reasonable and there was consequently a large increase in passenger traffic. Also, there was intense price competition that resulted in discounted fares, promotional offers, and the introduction of flights to newer destinations...
Jet Airways From 2000 – 2010
The air travel market worked hard to make up for lost time after being flat for a couple of years. Jet Airways and other airlines appealed to the government to reduce the tariffs on aviation fuel in India, which was expensive compared to the prices in other countries. Jet Airways’ share of domestic passenger traffic rose to 48.75, or over 6 million passengers, in 2002. Though the company had reportedly been profitable from its inception, it posted considerable losses despite a total revenue of Rs.28.76 billion in 2003...
Going International
On March 22, 2004, Jet Airways became the first private airline to fly an international flight from Chennai, India, to Colombo, Sri Lanka after it and other private airlines were given permission by the GoI to operate scheduled services to international destinations. Jet Airways was poised to profit from an expected extension of flying rights across Asia. An initial public offering of 25% of shares, discussed since 1995, was also in the works in 2004. Jet Airways had borrowed about $800 million to finance new aircraft in 2004...
Naresh Goyal Turning into Martinet Leader
Naresh was the man with the Midas touch, and appreciation and awards found their way to him and to his company. (Refer to Exhibit III for details on Jet Airways National and International Awards). He headed the company as its solitary sculptor and allowed no argument...
Indian Aviation Market 2010 – 2019
It was not easy for the Indian aviation industry to progress in 2012 as it saw the grounding of Kingfisher Airlines and financial trouble striking Air India and other carriers. Also, the Maldives government had ended an important $500 million airport upgrade contract bagged by a top Indian infra firm. To provide some support to the ailing Indian carriers, the GoI came up with some pro-industry policies like allowing foreign airlines to invest in their Indian counterparts...
Jet Airways from 2010- 2019
Although the aviation industry was facing challenges globally and in India due to the Eurozone debt crisis and a slower than expected economic recovery in the US, a distinct slowdown of the Indian and Chinese economies, depreciation of currency in India, and escalating fuel prices,..
Naresh – Fall from Grace
Naresh’s excellent ability to make friends and collaborate helped Jet Airways to secure a $379-million investment from Etihad Airways, the first FDI in an airline after the relaxation of norms, in the year 2013...
The Beginning of the End?
By August 2018, it became known that Jet Airways was in serious financial trouble. A combination of external and internal factors saw the company default on the payment of salaries to its staff. Its losses in the fiscal year 2018 -2019 were to the tune of Rs.32 billion. In August 2018, the company considered a 25% pay cut for employees...
Road Ahead – More Challenges Ahead for Jet Airways?
Many industry experts wondered whether Etihad’s bid was sufficient to get Jet Airways to fly again. Martin noted, "The situation is bad with assets already being transferred to other airlines like SpiceJet and this offer seems nothing more than eyewash."..
Exhibits
Exhibit I: NareshGoyal
Exhibit II: Jet Airways from 2000-10
Exhibit III: Jet Airways National and International Awards
Exhibit IV: Jet Airways’ Consolidated Key Financial Statements – 2018 – 2011
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