BS PRESENTATION ON TOPIC

“FAILURE OF JET AIRWAYS”

 INTRODUCTION
by Aishwarya

• Jet Airways (India) Private Limited is India’s leading private airline. It was
incorporated on 1st April 1992 as a private company but commenced
operation as an Air Taxi on 5th May 1993.
• The company was granted the scheduled airlines status in 14th January of the
year 1995. Jet Airways become a deemed public company on 1st July 1996.
• It boasts a market share of about 45 percent.
• Its headquarters is in Mumbai and was one of the largest airlines in india
with hubs at Mumbai, Delhi, Chennai and Amsterdam airports.
• It carries about seven million passenger per year.
• Jet Airways began domestic flights operation with four new generation Boeing 737s
on May 5, 1993. The first flights were from Mumbai to Delhi and Madars and ten
other destinations.
• Jet Airways is known for its Punctuality and outstanding services which attracts a
large proportion of business travellers .
• How ever it closed reservations to international services on 12th April 2019.
Subsequently the carrier suspended all operations from 17th April 2019 citing
financial issues.
 Reason For Failure
• Purchase of Air Sahara in 2006 for $500 million in cash.
• Poor management
• Low cast carriers were underestimated
• Fluctuations in oil prices and fall in rupee
• Failure to find an investor
 Mistakes
• Jet airways was not offering cheap flights was not a smart idea, as the airline
kept the high running costs. But the company somehow thought that was a
good decision.
• Jet Airways ended the Jet Konnect brand and the carrier made the
commitment to only offer full-service flights domestically in 2014.
• the demand for low-cost travel at the time (and still now) is very as tickets are
expensive. This has allowed low-cost carriers, namely IndiGo, to capture a lot
of the domestic market.
 Down fall
• Jet's problems began when it embarked on an aggressive international expansion plan, said an industry
executive who has been associated with the airline.
• The carrier ordered 22 wide-body aircraft for delivery over about 18 months, starting in 2006,
depleting cash, the executive said.
• Then Jet bought a struggling Indian airline called Sahara for 14.5 billion rupees ($209 million) in 2007
that had an ageing fleet and did not fit Jet's corporate culture, the industry executives said.
• Meanwhile, a newcomer, low-cost carrier IndiGo, had begun chipping away at Jet's market share with
cheap fares, one of the executives said.
• In 2013, Jet was close to running out of cash, but survived collapse when Abu Dhabi's Etihad Airways
bought a 24 percent stake in the Indian airline. As part of the deal, Etihad also bought three pairs of
Jet's landing slots at London's Heathrow airport and 51 percent stake in its frequent flyer program.
 Current Situation of Jet Airways
• After consistently missing payments, one by one, lessors began withdrawing their
aircraft from Jet Airways’ fleet. In addition, the Indian Oil Corporation refused to
serve any fuel to the airlines‘ aircraft for the same reason.
• the airline departed for its last flight (for now) on April 18th, 2019.
• the airline has virtually no assets and it‘s value crumbles by the day.
• However, Jet Airways‘ staff are the saving grace here, as they are committed to
continuing working for the airline. The staff met an Indian politician, Devendra
Fadnavis. He assured that the government of Maharashtra (a state in India) will also
make a move if nobody puts out a bid.
 Will jet airways come back
• Stake should be lowered to 22 per cent and exemption from the SEBI's regulations on open
offer and preference pricing.
• Etihad isn't in a good shape at the moment - it posted $1.3 billion losses in core airline
operations in 2018, however, its interest in airline through EoI (expression of interest) is an
indicator that airline might take over Jet if the SEBI norms can be modified and valuation
reduced.
• Jet Airways has a lost a lot in terms of positive name recognition, reputation, and key assets.
A “new” Jet Airways would have to reassure travelers that they can trust the carrier with
their travel plans.
• it would be necessary for Jet Airways to define themselves as something different to what
India already has.