DISSERTATION FOR THE DEGREE OF BBA AVIATION OPERATIONS

WILL JET AIRWAYS 2.0 BE SUCCESSFUL ?

Submitted by : Supervised by :
TEETIKSHA SHEORAN CAPT. MAHENDER SINGH

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 DISSERTATION BY : TEETIKSHA SHEORAN

WILL JET AIRWAYS 2.0 BE SUCCESSFUL ?

CONTENTS
EXECUTIVE SUMMARY
CHAPTER 1 : INTRODUCTION
CHAPTER 2 : LITERATURE REVIEW
CHAPTER 3 : RESEARCH DESIGN , METHODOLOGY AND PLAN
CHAPTER 4 : FINDINGS AND ANALYSIS
CHAPTER 5 : INTERPRETATION OF RESULTS
CHAPTER 6 : CONCLUSION AND SCOPE OF FUTURE WORK
APPENDICES

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 EXECUTIVE SUMMARY

Jet Airways had entered the aviation market in 1993 where Air India was ruling the market. Jet Airways customer
focus grabbed the attention of the Indian market as during the early times only the financially stable and better people
could travel in aircrafts and they would judge an airline on the basis of their services. Jet Airways slowly completed its
acquisition over the Indian aviation market but in 2005 their main competitors came who focused on the majority of
the population of India which were the lower middle and upper middle class people. Indigo ( LCC ) completely
acquired the aviation market and this resulted in Jet Airways losing its revenue. In an attempt to capture the market
again , Jet Airways acquired Air Sahara and introduced JetLite but these attempts were futile as they completely
downgraded their reputation thus losing their loyal customers. Their reign in the Indian aviation market ended bitterly
in 2019 but they were revived by the Kalrock-Jalal consortium in 2021 with Jet Airways planning to restart their
operations by summer of 2022. This new Jet Airways would be completely different but their priorities would be
similar “ best customer service for economical price”.

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 INTRODUCTION
• Indian Aviation started in 1932 when the first
airline Tata Air Services came up as an airmail
carrier within India. In 1947, after India’s
independence, Government took a 49% stake in
Tata Airways and was renamed as Air India.
• In 1953, The Indian government nationalized the
aviation industry and took control of all 8 major
airlines which were merged into two airlines Air
India and Indian Airlines. These remained India’s
prized possession controlling the majority of the
domestic airspace.
• Air India came to be known for its superior
service and profitable business model.
• During the early 1990s, India’s financial crisis was
at it’s peak .India reversed its stance on regulations
and allowed private airlines to enter the market.
Hence , Jet Airways came up during the time when
Air India completely dominated the Indian
Aviation sector .

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The change in regulations laid the groundwork for the current Indian Aviation Industry to become the
world’s 3rd largest aviation market behind US and China and is growing fastest among all.

Jet Airways was founded on 1st April 1992 by Mr. Naresh Goyal . At the time of its incorporation there
shareholder’s were Mr. P.V.V. Chalam and Mrs. Anita Goyal with an initial investment of $20 million.

Jet Airways commenced it’s operations as an air taxi operator on 5 th May 1993 with 4 leased Boeing 737-400
aircrafts which was a key decision for the airlines and had the first-mover advantage to establish strong brand
recognition and customer loyalty before their competitors entered their field of service.

Right from the start, Jet Airways focused more on customer service and because of
its superior customer service they had become the most popular airlines in India.

In its first financial year, Jet airways served 12 destinations in India and carried
around 663,000 passengers and had a 6.6% market share. By the next year, it
was India's second largest private airline, having carried 1.7 million passengers in
1994.

Jet Airways had managed to improve its market share from 6.6% ( 1993-1994 ) to 42% (2000-2001 )

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But in 2001 , Aviation Turbine Fuel ( ATF ) prices were decontrolled which
meant fuel providers could set the prices but this would be reset to Market price by
the government periodically .

Jet Airways suffered losses for the first time in financial year 2001-2002 as the
costs increased and demands fell. The primary reason of reduced demand was
terrorism. After the terrorist attack of 09/11, numerous airlines experienced financial
crisis both in U.S. and other parts of the world.
Due to these losses ,deal worth $ 520 million for 10 aircrafts with
Embraer for Embraer 175 was postponed.

On 28th December 2004, Jet Airways was listed on the

Bombay Stock Exchange and became a public company.

Jet Airways also launched ‘CHECK FARES’ scheme withdrawing it’s 15/21/30 days Advance
Purchase ( APEX ) fare scheme making tickets more cheap and affordable ( tickets are sold on
first come first serve basis
The Indian government lifted the foreign ownership limit on Indian Airlines from 40% to 49%.
So, Jet Airways moved to raise funds via an IPO. In February 2005, Jet Airways offered 20 % of
its stock 17,266,801 (1.72 crore shares) Equity shares

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 FUNDS GENERATED
0.36
0.61; 1%
On the 1st day itself Jet Airways received 7.32 crore bids where FIIs accounted
for 69.93% of the total issue, Mutual funds 28.69% of the total ,Insurance 28.69; 29%

companies 0.61% of the total and FIs for 0.36 % of the total.
Jet Airways raised Rs. 18.9 billion which made Mr. Naresh Goyal a paper billionaire.
69.93; 70%
In 2005, marked the birth of 5 new airlines namely,
• Kingfisher ( May , 2005 ) FII Mutual funds
• Spice jet ( May , 2005) Insurance companies FIs
• Indigo ( August , 2005 )
• Paramount ( October , 2005 )
• Go Air ( November , 2005 )

To compete with the growing competition from Low Cost Carriers , Jet Airways decided to buy the loss
making Air Sahara on 19th January 2006 for US $500 million in cash but the deal fell apart due to price
issues .
Jet Airways did managed to buy Air Sahara on 12th April 2007 for $340 million.
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 MARKET SHARE : dropped from 11% in January 2006 to a reported 8.5% in April 2007

16th April 2007, Jet Airways announced
decided to rename Air Sahara as Jetlite
Which will be a low-cost carrier and a full-
service airline to challenge all the Low
Cost Carriers .
On 8 May 2009, Jet Airways launched another
low-cost brand All Economy No-Frills services.
operated on profitable short-haul routes with
higher passenger payload.

JetLite merged with Jet Konnect on

25th March 2012 .
Jet Lite was like a hole in Jet Airways
balloon because it lost them customers as
On 1st December 2014, Jet Konnect
people would buy their tickets expecting
itself was integrated into Jet Airways
good service but when they found out that
ending its own operations and flew
customer service was poor,
for them under the codeshare.
Jet Airways lost some loyal customer there.

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During 2016-17, Aviation industry was going through a tough time. The industry was facing major
challenges.

MAJOR
CHALLENGES
2016-17

MANAGEME GOING
HIGHER NEO
RISING NT OF FORWARD NEW
COST OF HIGH TAX INDUCTION
FARE WARS OPERATIONAL MARKET REGULATIONS
FUEL IN RATE ON GST CITED AS A
COSTS EXPECTATIO TO INCREASE
INDIA CHALLENGE
NS THE REVENUE

In November 2018, Jet Airways had a negative financial outlook due increasing losses.
Total enterprise value = Rs. 12,000 crores
Total debt = Rs. 8,000 crores and
Market value at Rs. 3,940 crores.

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 Tata Group offered to acquire a stake in Jet Airways but without Goyal

The Independent directors and other board members suggested that the deal
must be made but their requests fell into the deaf ears of Mr. Naresh Goyal.

On March 2019, nearly a fourth of Jet Airway’s aircraft were grounded due to unpaid lease rates.

On 25th March 2019, Chairman of Jet Airways Mr. Naresh Goyal and his wife Mrs. Anita Goyal stepped
down from the board of directors.

Jet Airways suspended all its flight operations due to lenders rejecting Rs. 4 billion of emergency
funding.

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FISH BORN DIAGRAM FOR JET AIRWAYS FAILURE

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On 17th June, Jet Airways got no acceptable
offers from Etihad Airways and Hinduja
Group lenders so Jet Airways decided to
refer the company to National Company Law
Tribunal (NCLT) for bankruptcy with a debt
of $ 1.2 billion, thus ending Jet Airways
reign in the aviation industry.

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 LITERATURE REVIEW
• JET AIRWAYS STORY
BY SANJIB DUTTA
It gives an overview of Jet Airways success in domestic industry and its performance as a whole from 1992. Jet
Airways focused more on its customer service than anything else and had become the most popular airlines in India .It
states about the fleet used initially and how it turns out to be beneficial in both short and long term. The case specifies
many variables that were taken care of during its initial phase such as Jet Airways lean structure, type of aircraft,
Number of employees per aircraft and more. Jet Airways was the only private player in the Indian aviation industry
but later on LCC such as Indigo , SpiceJet came up and Jet Airways had to gear up for some stiff competition .The
company was also embroiled in controversy regarding its ownership where Naresh Goyal claiming that he owns the
company .

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JET AIRWAYS HISTORY
BY THE ECONOMIC TIMES
It states how Jet Airways came into existence as a private company with limited liabilities under the companies act
.Jet Airways started as an air taxi operator and was granted scheduled airline status on 14th January, 1996. On28th
December, it became a public company .It mentions about the shareholder’s and how the shares were transferred
to Tail Winds. And how the shares were transferred as per the letter of Ministry Of Civil Aviation ( MOCA ).
Afterwards the case gives details of its year wise journey from 2004 till 2017. It mentions all the deals that were
done, all the awards that Jet Airways won along its way, all the schemes that Jet Airways started, new and
affordable routes used by Jet Airways

JET AIRWAYS WAS NARESH GOYAL’S CHALLENGE TO AIR INDIA MONOPOLY

BY ARSHAD KHAN
Naresh Goyal used to work in number of airlines. When Indian Economy was liberalized, Goyal seized the
opportunity and launched Jet Airways in 1993 to challenge the monopoly of Air India .From mid 1990s Jet
Airways had unprecedented growth controlling nearly half of the sky becoming the largest carrier by passenger
market share in India by 2010 which they held till 2012. But, with its growth there were few links of Naresh
Goyal with the underworld but he remained unharmed. The case also states the kind of a man Naresh Goyal was
which helped Jet Airways survive for some more time by bringing in Etihad on board and with them an
investment of $379 million for 24% stake. But, when the crude oil prices shot up in 2018 and Indian currency lost
nearly 20% of its value the airline’s cash flow was severely dented and Jet Airways couldn’t recover from there.

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WHY JET AIRWAYS FAILED
BY TARIF MOHAMMED KHAN
The article stated the reasons for the failure of the most reputed airline in India. It was stated that purchasing of
Air Sahara in 2006 for $500 million was the key reason and that this decision was made by Naresh Goyal even
though experts suggested that the price was set too high. With the entry of LCC and financial crisis, it impacted
traveler numbers leading to LCC dominating the market. Jet Airways launched JetLite but instead of making
profits it started to incur more costs in terms of aircrafts, routes and parking slots. The article focused on
management style of the Chairman where the company only had one management team led by Naresh himself
and terrible decisions by Naresh himself. Article also stated how crude oil prices play a crucial role .

JET AIRWAYS, JETLITE AND JET KONNECT – IS THERE REALLY ANY DIFFERENCES?
BY ASEEM RASTOGI
Jet Airways was incurring losses for some time and these problems started from 09/11 attacks. Even SARS,
Recession, Fuel Prices, Terrorism, Human Capital, strikes everything affected Indian Aviation.
Then Indian Aviation Sector was hit hard by the recession and Jet Airways wanted to shift some of its own
aircrafts into JetLite but they couldn’t do so due legal hassles. So, Jet Airways brought another brand – Jet
Konnect offering no-frill services under the same logo, imagery and uniforms. Through this Jet Airways wanted
to reduce costs and generate profits by bringing in more customers but it gave customers a wrong impression of
Jet Airways as they had booked a ticket for Jet Airways but services offered were below expectations. Jet
Konnect’s presence created confusion in the minds of people .

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 MANAGEMENT AND REGULATORS FAILED JET AIRWAYS
BY RAJEEV KUMAR UPADHYAY
Jet Airways was a debt ridden company and unable to even service debt both in short and long term. Jet Airways
was a full service carrier and had very high operational costs in comparison to many other airlines operating in
Airways even failed to pay the salaries to its staff for a long time. And even the lenders declined to provide any
relief by lending with emergency fund of Rs. 1,200 crores even after giving assurance for the same. The bids of
2019 were not accepted by lenders, they had to move to National Company Law Tribunal (NCLT) for insolvency
proceedings. It would be almost impossible for Jet Airways to come back from this point .
Indian aviation industry is also going through a transition period as it is not sure which model (low cost or full-
fledged) of operation should be opted. Recently even the profits of a few profitable carriers like Spice Jet and
Indigo are continuously falling and the remaining carriers are already in losses which shows that the aviation
sector is not in good health.
The reasons for the problems in aviation sector are not only limited to the operational strategies of these carriers
but also the government’s policies on fuel pricing and maintenance charges imposed by the Airport Authority of
India. Even the roles and responsibilities of independent directors in the affairs of these companies has played a
crucial role for fall of many companies.
There is also a need to check the way financing is done in the industry as well. Banks and financial institutions
convert debt into equity of distressed firms which cleans the books of banks and distressed firms. As a result, the
liabilities of these firms fall in short term but does not provide a long term solution as these financial institutions
are efficient in running those businesses. Rather these financial institutions end up artificial layers in operations of
these businesses.
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 FALL OF JET AIRWAYS DUE TO POOR CORPORATE GOVERNANCE
BY TEJAS GEETEY
The Board of Directors see the working of the company. These activities performed involve many stakeholders,
promoter, shareholders, employees, consumers and any other community and a corporation must protect the
rights of every stakeholder but in a promoter centric corporation these rights are ignored if it affects the interest of
the promoter and majority shareholders.
The mismanagement and unfettered powers that were given to the promoters in Jet Airways . Jet Airways was
fully controlled by Mr. Naresh Goyal and often disregarded interests of other board member’s .
These management issues caused many Independent Directors of Jet Airways company to resign after the
collapse of the TATA SONS deal. Even the decision to acquire Air Sahara was deemed by many experts as the
one which should not be made but Mr. Naresh Goyal acted on his own interests.

JET AIRWAYS 2.0: BOARDING CLEARED, TAKEOFF TO BE SCHEDULED

BY NEHA LM TRIPATHI

The new owners of Jet Airways are Kalrock – Jalan consortium. After 2 years of proceedings at National
Company Law Tribunal (NCLT), the revival plan by Kalrock-Jalan consortium got ahead. But, National
Company Law Tribunal (NCLT) has made it clear that Jet Airway’s would have no rights over the slots which
were given to various airlines and further decisions regarding it will be with Directorate General of Civil Aviation
( DGCA ).

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The consortium will infuse Rs. 1,375 crores out of which Rs. 475 crores will be as payment to
stakeholders including financial creditors. The rest of Rs. 900 crores would be invested for capital
requirements for Jet Airways smooth functioning .For managing day-to-day affairs till resolution
process is complete Jet Airways has appointed a 7 member monitoring committee.

The pandemic has altered every business plan and strategy of airlines globally and it is an
important question whether operations of Jet Airways 2.0 be sustainable as passenger demand is at
the lowest and it’s difficult to predict a definite time when industry be the same as pre Covid.

But, Jet Airways 2.0 will start with a clean slate and debt free. Factors like low rentals of aircrafts,
reduced fuel prices, growing airport infrastructure in India will aid Jet Airways.

Right now Covid 19 is also a major risk which can bring down your load factor from 80% to 0% in
just one day and is a big business risk. Jet Airways will have to establish a lot to negotiate new
contracts and re-establishing the operational front. As the owners are new they will need to gain
consumer and industry confidence to sustain.

The slot issue is not going to be an issue as slots remain unutilized in covid19 situation and with
the arrival of new airports this problem could be resolved easily.

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 RESEARCH DESIGN , METHODOLOGY AND PLAN

RESEARCH DESIGN

• At first ,We will gain information on our topic 'Will Jet Airways 2.0 be successful’.
• Secondly, We had to find our research objective : the reasons for the failure of Jet Airways and
what new steps that must be taken by the new owners of Jet Airways.
• collecting data relevant as per our research problem
• analyze the collected data to find the reasons and solutions to our problem.

RESEARCH METHODOLOGY

Descriptive research was used as surveys and case studies were used to clarify the facts and get data.

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 RESEARCH PLAN

Our main objective was to find a solution for Jet Airways to cope with the ever changing Aviation
Industry and collect data to obtain necessary information(data) regarding customer needs and
preferences .
Types of Data : Primary and secondary data
The data collected by a person is primary data and used by others is secondary data.

We used mainly primary data using a Questionnaire ( Google Form ) to know about the services
offered , about their experience with Jet Airways , What are their needs , What services they
preferred and if any suggestions to improve their experience.

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 FINDINGS AND ANALYSIS

FIRST 3
PREMIERE 1 Around 67% people had travelled in Jet Airways
ECONOMY 63

Around 94% people preferred to travel in

economy class.
Thus showing us about majority preference in
India.

Approx. 13% people got no services and 87%

people were offered services that shows how
Majority were happy with the services as well much Jet Airways focused on customer
satisfaction.

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28; 28% People prefer JET AIRWAYS for
47; 47% domestic travel ( 47%) more
than that for just international SNACK AND/OR BEVERAGES
25; 25%
DOMESTIC
INTERNATIONAL
travel (25%). 100

DOMESTIC+INTERNATI
64
ONAL
50

GOURMET MEALS 0 29 FAST PREPARED FOODS

26
89 21
SHORT HAUL FLIGHTS ( FLIGHT DURATION < 3HRS ) – 31

• Snacks and Beverages

74
• Fast prepared Foods
MEDIUM AND LONG HAUL FLIGHTS ( FLIGHT
DURATION > 3 HRS ) – PROPER MEALS
• Proper meals
• Gourmet meals SHORT HAUL FLIGHTS MEDIUM AND LONG HAUL FLIGHTS

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 PERCENTAGE
35
31%
BOOKING TICKET PREFERENCE 30
29%

25

Majority of people prefer to buy tickets between 7- 20

19%

30 days prior to their flight 15 12%

9%
10

0
1-3 DAYS 4-7 DAYS 7-14 DAYS 14-30 DAYS MORE THAN
FREE MEAL IN-FLIGHT ENTERTAINMENT BEFORE BEFORE BEFORE BEFORE A MONTH

36
33
29 Majority of people prefer Free meal over in-flight entertainment
in any kind of flight
16
12
9 WIFI 13
PERSONAL LCD SCREEN 3

SHORT HAUL FLIGHTS MEDIUM HAUL LONG HAUL FLIGHTS (

( < 3 HRS ) FLIGHTS ( 3 - 6 HRS ) > 6 HRS ) WI-FI is the preferred option for in-flight entertainment

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 INTERPRETATION OF RESULTS

 Majority prefer Economy class in the Indian Aviation Market

 Jet Airways should focus on domestic travel as majority travel for domestic
 Jet Airways should keep First class, premiere class and economy class for medium and long haul flights
Most number of people who are travelling on medium haul / Long haul flights in economy class must have
Wi-Fi. Jet Airways should provide free proper meals and beverages for medium and long haul flights but
keeping gourmet meals as buy-on-board.
 Jet Airways must keep the First class and economy class for Short haul operations. They must keep free
meal services for short haul routes and the meals served to economy passengers should be snacks and
beverages only to keep the costs incurred low. Some amount of proper meals can be put on the list but only
to be served on extra costs with First class services same as earlier.

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 Now the main part is attractive prices which must be kept for a certain period of time and the right time only.
The time period to be focused should be between 7 – 30 days before the flight time because most of the
people buy tickets during this time. Jet Airways should use the mix of the CHECK FARES scheme and the
7/14/30 days advance purchase ( APEX ) fare scheme to maintain a decent price for their tickets to attract
customers to create revenue .

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 CONCLUSION AND SCOPE OF FUTURE WORK

Jet Airways started in 1992 and before them Air India had a monopoly over Indian Aviation market. Jet Airways birth was
due to governments new regulations but new regulations during their tenure had also caused them a lot of problems. Such as
ATF prices were deregulated . The high operational costs were also a major factor as even airports wanted to expand due to
the increased passenger demand. Jet Airways introduced Jetlite and Jet Konnect in an attempt to compete with LCC but they
proved to be a complete failure as it eroded Jet Airways reputation. Jet Airways business approach and power centralization
was a major problem as Mr. Naresh Goyal would take decisions on his own and would not mind other board members. Jet
Airways has been acquired by Kalrock Capital and Murari Lal Jalan on June 2021 with a plan to restart Jet Airways
operations from summer of 2022 focusing only metro-to-metro routes. Covid 19 has affected the Aviation market as a whole
as it has reduced the lower and upper middle class. But, Covid 19 will help Jet Airways as all the other airlines have
undergone losses and aviation market is now changing so jet airways can alter themselves as per the current market with
future changes easy. Our study on this subject would help us to analyze the current market scenario and help to determine
where the Indian Aviation market is tilting towards whether it is LCC or Full service airline. And according to that Jet
Airways could act in the future and currently they could use the PDCA technique to ensure that the plan is working or not. If
yes then they can continually grow and get better and if not doing well then they might have to change their approach and
analyze its outcome.
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 APPENDICES

Jet Airways planning to resume operations from summer of 2022 resuming talks with Chennai, Mumbai and
Delhi. Jet Airways has planned 14 destinations initially and the focus would be metro-to-metro connectivity
and then non-metro connections. Jet Airways plans to have 20 aircrafts in the domestic market due to
regulations and then internationally. Jet Airways will use Boeing 737 max as they are fuel efficient and
DGCA has approved it .Jalan Kalrock Consortium has been in the process of reviving the grounded carrier
with the existing Air Operator Certificate (AOC).

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THANK YOU!!!

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