Jet Airways' new CEO Gary Toomey faces big challenges

Apart from creating synergies between Jet and Etihad Airways, Gary K. Toomey has

to steer the airline through a bitterly domestic competitive market where low-cost Malaysian

airline AirAsia is expected to enter the skies soon.

Manu Kaushik

Following the departure of Nikos Kardassis last week, Jet Airways on Thursday (June 13)

appointed Gary K. Toomey, 58, as its new CEO. Toomey, an Australian, had previously

served as president and CEO of the Air New Zealand Group. He has spent more than 20 years

in the aviation industry working in senior positions in airlines such as Qantas and Airlines of

Papua New Guinea, apart from Air New Zealand.

The challenge for Toomey will be to create synergies between Jet and the Abu Dhabi-based

Etihad Airways, which acquired a 24 per cent stake in Jet in April for Rs 2,058 crore, the

biggest foreign investment in the Indian aviation sector after the government allowed foreign

carriers to invest in Indian carriers last year. Toomey has a daunting task ahead. Taking on

competitors such as IndiGo and SpiceJet, whose financials are in a far better state than Jet's,

will not be easy. With low-cost Malaysian airline AirAsia also expected to enter Indian skies,

experts are already predicting a bloodbath in which only the fittest will survive.

Kardassis quit after nearly 43 months with Jet Airways. He was a personal favourite of Jet

Airways Founder-Chairman Naresh Goyal. Kardassis took some bold steps to reduce losses

by focusing on profitable routes and cutting down loss-making ones. But he was unable to

make the company profitable - Jet has been posting net losses for the last five financial years.

Goyal himself too is an aviation industry legend. He began as a cashier but has risen to

become one of the most influential people in this sector. It is said that one stage Goyal knew

by heart the departure timing of every flight in India.

 Loss- making domestic ops a challenge for new Jet Airways team

The biggest challenge facing the new management at Jet Airways, including its recently

appointed chief executive officer Gary Kenneth Toomey, will be to ensure that the carrier's

domestic operations turn profitable.

The Naresh Goyal promoted airline, where the Abu Dhabi-based Etihad Airways has

picked up a minority stake, makes money on international routes but is heavily bleeding

when it comes to domestic operation. In 2012-13, the losses of the airline from domestic

operations has been over Rs 1,100 crore, whereas, the international operations fetched them a

profit of over Rs 350 crore.

"The new management would urgently need to work towards making its domestic

operations profitable. Making Jet Airways' domestic operations profitable is necessary for the

airline and for the domestic aviation industry," said Kapil Kaul, CEO of Centre for Asia

Pacific Aviation, an aviation consultancy firm. Kaul further said that Jet needs to put a

business model in place for the domestic operations and put a right framework in place to

support it.

Jet operated with three different brands in the domestic market till sometime back.

The number has been brought down to two — Jet Airways and JetKonnect — but the airline's

dynamism in pricing the inventory leaves a thin line of difference between a full service and

low-cost pricing.

"They need to get clarity on the model they will follow — low cost, full service or a

mix of two — and support it with the right cost of operations. They can not compete with

low-cost carriers in offering low fares with their high cost of operations," he added.
 A Jet Airways' spokesperson did not offer any comment on the agenda of the new

management. Not only is the airline making losses in the domestic sector, it is also losing

market share in the domestic sector to other carriers. The airline, which was the largest carrier

in terms of passengers carried till June 2012, has been consistently losing market share with

its market share falling from 26.2 per cent in January to 22.5 per cent in May 2013.