“It’s all about efficiency, reducing costs and excess capacity, and being more reliable,” said Jet

Airways’ chief executive Nikos Kardassis, who returned to the position after an earlier stint between 1993 and 1999. “The strategy was to be best on on-time performance, own the best product on ground and air, improve yields and operating margins, deleverage balance sheet, and also grow.” While all the airlines are talking about cost-cuts and route rationalizations to turn things around, the Jet Airways durbar formulated a number of innovative strategies—some that sector experts openly disagreed with at the time, only to take back their words today. These include improving efficiency, increasing flights on existing and new routes without adding new aircraft, reducing the weight of flights to scale back fuel expenses, and launching a second low-cost carrier. As a first step, Jet Airways halted its expansion programme for long-haul international flights in November 2008— following an 82% rise in jet fuel costs in August that year compared with the same month a year earlier. It also pulled out loss-making long-haul routes, including US routes, and replaced some Boeing 777 aircraft with the smaller Airbus A330s. In the preceding two years or so, the airline had been adding two new flights every month.

Without adding a single aircraft, Jet Airways started expanding its flights to West Asia, where the gestation period for flights is 6-12 months, unlike 18 months for long-haul routes. “We created a Gulf hub in Mumbai, where planes that reached Mumbai in late afternoon or evening were used to fly to West Asia during the night and returned early morning. These planes were back in flying on domestic routes during the day,” said Raghavan. “Thus, we improved aircraft utilization and encashed the market of VFR (visiting friends and relatives) and labour traffic to the Gulf.” Jet Airways also started carrying passengers from Bangkok to London via Mumbai and back, a model that has been adopted by Singapore Airlines Ltd and Emirates. Starting in early fiscal 2009, Jet Airways saved $600 million in a year’s time—$160 million through network restructuring, $170 million with cost-cutting programmes and $270 million by cash conservation measures such as delayed repayment of loans and renegotiating with vendors. The airline identified 40 items that could help cut costs. “For instance, we restricted to two electric ovens on the flights instead of seven. We started carrying lesser water after studying the statistics of water usage,” Raghavan said. This was in line with measures earlier taken by some overseas carriers. By removing seatback phones from its MD-80s and B737-400s, a US airline shed 200 pounds (90kg) per aircraft, translating into 3,400 gallons (around 12,890 litre) of fuel saved annually. Alaska Airlines said it saved $10,000 per year in fuel in March 2004 by removing just five magazines per aircraft along with reducing the weight of catering supplies. Air Canada considered stripping primer and paint from its Boeing 767 to save 360 pounds per aircraft. This fiscal, Jet Airways reduced its headcount by 10.9% to 11,430 in the June quarter, compared with the same period of last year. More recently, it entered into an engine maintenance contract for 10 years with Singapore Technologies Aerospace Ltd, under which it will be billed on a “pay as you fly” basis—allowing it 20-30% cheaper rates. Second subsidiary In May 2009, with passengers still staying away from air travel, Jet Airways astounded pundits by announcing a second low-fare carrier—converting some of its full-scale flights into a no-frills all-economy service under the brand name of Jet Konnect. “This was the real turning point for Jet Airways. We realized that our seat occupancy is dropping. The convenient answer for that was economic slowdown. You need no Nasa-level thinking to understand there is no point in

” he said. Raghavan admits that it took some time to integrate the engineering. So we are revenue-positive on account of that front. Goyal agreed that the turnaround was far from complete. said quick adjustments to match capacity with demand by offering the right products and services have been key to Jet Airways’ profitability. Another crucial step was improving the performance of JetLite. The JetLite staff will now wear a new uniform too. The move was in response to the revival of business class traffic. Interestingly.500 crore debt as on 30 June. with a front-end giving us close to 65% in terms of load factor. Analysts were sceptical as the company already had a low-cost carrier in JetLite. we are operating at 78-79% load factors. we had improved food on board. choosing JetLite for domestic leg. particularly in India. Now. with the reconfigured aircraft.” Raghavan pointed out. and expected confusion among travellers. “But once it was done. we were operating at a seat factor of around 74-75%. assistant professor of management at Wharton School. changed the all old seats and brought in new planes. “With this. At that time. half the low-cost carrier’s fleet was grounded. US. where yields were higher and any agent across the world could sell JetLite tickets.” he said. with the airline staring at a `13. “This includes emphasis on operational improvement—this is how JetLite. sales and revenue management functions of Air Sahara into Jet Airways. We had to continue to fish in the low-fare market. Vishwanath. But Chaudhuri credited the turnaround primarily to the overall improvement in the global economic outlook. “Prior to Jet Airways Konnect Select. He did not elaborate on the company’s reported plans to raise $400 million by issuing fresh shares to bring down the debt burden and finance expansion plans. Unexpected results K. the company announced the launch of Konnect Select.” said Raghavan. But more surprise was in store. JetLite still doesn’t have a chief executive or a chief operating officer. which has led to better revenue for airlines worldwide—especially in the high-yielding business travel segment.fishing at a dried pond.” Raghavan said. the airline’s revenue was up by 25%. University of Pennsylvania. too. We converted one aircraft every night to introduce Konnect Select. . vice-president for commercial strategy and investor relations at Jet Airways. purely because of this change. perpetually known for operational and punctuality problems. Nasa is National Aeronautics and Space Administration of the US. Gupta also noted that Jet Konnect helped the company gain market share and improved its load factor. was improved. told an analysts conference on 26 July that the company achieved four times its target incremental revenue of $46. JetLite’s inventory was in the global distribution system (for tickets). “The new blue and white uniforms with embroidered collars in traditional Jodhpuri style reflect youthfulness and alignment with Jet Airways.” he added. On 26 April. an eight-seat semi-business class cabin on all its Jet Konnect flights. which was created when Jet Airways bought Air Sahara in 2007. designed by Italian fashion designer Roberto Capucci.000 a month through Konnect Select.” he said.G. Debt burden Saikat Chaudhuri. All the medium-sized Konnect aircraft on domestic routes have twin classes now. which meant that 25% of the seats were anyway going empty. With international passengers. “The young boys and girls at Jet Airways did the magic.

500 crore is Indian rupee loans raised two-three years ago to fund the working capital.” he said.” he said.A senior Jet Airways executive said the carrier is in no hurry to raise funds. asking not to be named as he is not authorized to speak to the media. “Out of the `13.shine. “To continue to be successful.5-4%. We have 41 planes on the book and the current market value of those planes is higher than the outstanding debt. Chaudhuri also cautioned that happy days may not last long. Since we started making cash profits. It would have been difficult if we continued with our losses.” the executive added. there is no need to raise funds immediately. Main risk factors are a renewed partial recession as well as once again rising fuel prices precipitated by the improving economy.com/Article/Aviation/Jet-Airways-flies-on-innovation-wings/4512/cid140. “The remaining `4. http://info.000 crore is aircraft-related long-term loans that were raised at much cheaper rates—anywhere between 3. Jet needs to continue to remain dynamic to adjust to any changing conditions.500 crore debt. `9.aspx .

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