Strategic Management And Challenges In Jetairways Tourism Essay

Published: 23rd March, 2015 Last Edited: 23rd March, 2015

Jet Airways, an airline based in India, serves domestic as well as international routes. It

commenced its operations as an air taxi operator in 1993 with four aircraft; it was granted the

scheduled airline status in January 1995. Jet Airways, which started with 24 flights per day

across 12 destinations, now operates over 320 daily flights. The company was a 100-per cent

subsidiary of Tail Winds Limited till it listed its equity shares on the National Stock

Exchange of India Limited and the Stock Exchange, Mumbai, in March 2005. (www5)

In India, Jet Airways is the leading airline in terms of revenue passengers; it holds a 36-per

cent share in the market. The company grew its capacity at a CAGR of 50 per cent during FY

2001-06. It began its international operations in March 2004; the contribution of international

operations to the company's total revenues has registered a continuous growth since then. The

company generated revenues of EUR 1.06 billion in FY 2006, with international operations

accounting for nearly 12 per cent of its total revenues.

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Jet Airways connects 49 destinations across the globe - 44 destinations within India and five

international destinations that include London, Kuala Lumpur, Singapore, Kathmandu and

Colombo. The company has multiple reservation and ticketing networks comprising global

distribution suppliers, travel agents and sales agents in India and 74 other countries. It has a

wide cross section of partnerships and alliances, some of with are, with airlines such as

British Airways, KLM Royal Dutch Airlines, Northwest Airlines, Austrian, Lufthansa and

Swiss International; Indian and international hotel groups such as The Hyatt, Swissotel, The
Oberoi, ITC-Welcomgroup and Hilton; banks such as Citibank; car rental companies such as

AVIS and Hertz and telecommunication and other service providers. (www6)

LITERATURE REVIEW

2.1 BUSINESS STRATEGY FOR CHALLENGES

The key elements of our business strategy include:

Differentiate between product and service: Jet airways believe a key to its long-term success

is that they offer customers a better alternative in airline travel. Jet airways offer their

passengers a unique flying experience by providing new aircraft, pre-assigned seating,

reliable performance, meals on nearly all flights, city check-in facilities in Mumbai, Delhi,

Kolkata, Chennai and Bangalore, tele check-in facilities for business class travellers and Jet

Privilege members, same day return check-in facilities and a well developed frequent flyer

program. (Johnson, et al., 2008) They place high emphasis on customer service and quality.

Jet airways intend to continue to communicate openly with their customers regarding their

needs and areas which require continued improvement. Based on customer feedback, it is

believed that passengers prefer their customer service to that of their competitors and that this

preference is an important factor in their decision to fly with them over other airlines.

Continue to maintain a young fleet comprising a minimal number of different aircraft types:

Jet airways intend to continue their strategy of maintaining a young fleet and a minimal

number of different aircraft types to preserve the simplicity of their operations and control

operating costs.

Maximize revenues through efficient use of technology, focused marketing and optimization

of resources: Jet airways intend to continue to maximize it revenues through efficient use of
technology, focused marketing and optimization of resources. For this purpose, they use a

state-of-the-art yield management system developed by SABRE. They also intend to continue

to focus on improving productivity and unit costs through reduction of recurring maintenance

costs and more efficient utilization of their crew.

Further strengthen the brand name under which we operate: Jet airways intend to continue to

enhance the "Jet Airways" brand recognition in the marketplace through brand building

efforts, communication and promotional initiatives such as participation in industry events,

public relations and investor relations efforts. they believe that these initiatives, as well as the

listing of our Equity Shares, will enhance the visibility of their brand name and strengthen the

recognition as a leader in the Indian aviation industry.

Focus on domestic aviation sector: Jet airways intend to further penetrate of their key markets

in India by increasing the number of flights per day on their key routes and commencing

flights to new destinations in India. They believe that this is important to passengers who

choose airlines based on depth of schedule. Jet airways intend to continue focus on providing

high-quality services and facilities to their customers to consolidate their position as a

preferred airline for business travellers in India.

Operate flights to select international destinations, subject to obtaining necessary

Governmental approvals and other conditions. Jet airways commenced operation of regular

scheduled services to Colombo, Sri Lanka, and Kathmandu, Nepal, in March 2004 and May

2004, respectively, pursuant to the Government of India permitting private sector domestic

carriers to fly to certain SAARC countries. The Government of India announced on

December 29, 2004 that the Union Cabinet has approved a change in the aviation policy,

allowing Indian scheduled carriers with a minimum of five years continuous operations and

at least 20 aircraft to provide services to other international destinations. These destinations

exclude the Gulf countries of UAE, Qatar, Oman, Bahrain, Kuwait and Saudi Arabia, which

would be reserved for Air India and Indian Airlines for three years. (Johnson, et al., 2008)

However, these policy changes are not yet effective, and detailed guidelines will need to be

notified by the Ministry of Civil Aviation. As and when the changes in policy become

effective, the Government will also need to negotiate, and allocate to us, entitlements under

the applicable bilateral treaties for the respective countries to which they desire to fly. The

Government will also specify the frequency of flights that they will be entitled to operate.

There is no certainty when these policy changes will become effective and whether or when

they will be permitted to fly to destinations of our choice. It is believed that other

international destinations may be attractive primarily due to the significant revenue growth

potential and high yields that may be obtained, in light of the increasing customer demand for

flights to and from these destinations and India. Jet airways believe that they are well placed

to service these markets due to our reputation for high-quality service and customer

awareness of our brand. A significant number of passengers including persons of Indian

origin and non-resident Indians from these destinations use our airline in India. They believe

there has been an increase in the growth of outbound travel by Indian residents and intend to

target this market.

Reduce existing high interest debt: Jet airways have significant financing obligations, relating

to debt incurred in connection with financing the purchase of our aircraft and engines as well

as operating leases for our aircrafts and engines. We believe that reducing significant

financing obligations will improve our ability to meet our strategic goals. We intend to

reduce our existing high interest debt, including through utilization of the proceeds of the

Fresh Issue.
Continue to focus on personnel training and on motivating workforce: Jet airways intend to

continue to focus on personnel training to improve employee productivity and to ensure that

their employees understand the core strategies. Jet airways believe in open communication,

which creates a dynamic working environment and in setting out clear well defined policies

and goals. They intend to continue providing competitive wages and incentives to motivate

their workforce.

COMPETITIVE STRENGTHS OF JETAIRWAYS

We believe the following are our principal competitive strengths, which differentiate us from

other airlines:

Focus on business travel: Jet airways offer several services directed towards the convenience

of the business traveller, including telephone check-in facilities, through and "in-city" check-

in facilities, priority baggage service, high frequency services on major routes, same-day

return flights on major routes at convenient timings, point to point connections, providing

flight information on cellular phones of customers, customer loyalty program, e-ticketing,

business class section on almost all flights and airport lounges for business class passengers

at most airports. These facilities and their focus on providing high-quality reliable service

have contributed to us becoming the preferred airline for business travellers in India.

Young fleet comprising limited types of aircraft: Jet airways young fleet has enabled to enjoy

a high degree of performance reliability and to develop a reputation for being an airline that

delivers a safe, on-time, modern and comfortable travel experience. The aircraft types

provide with state-of-the-art technology and simplified maintenance procedures that allows

them to make adjustments to effectively manage the response to market developments. 34 of

Jet airways fleet of 42 aircraft are Boeing 737 variants and the remaining eight are ATR 72-

500 aircraft. They were the first airline to introduce the Boeing 737 NG aircraft in India.
Operating a fleet of limited types of aircraft leads to increased cost savings in terms of

maintenance and spare parts, scheduling is more efficient and employee efficiency and

productivity are increased.

Utilizing the aircraft efficiently: In fiscal 2004 and the six months ended September 30, 2004,

aircraft operated an average of 9.46 and 9.84 hours per day, respectively. By achieving high

utilization, they are able to optimize crew movement, spread their fixed costs over a greater

number of flights and available seat kilometres. They achieve high aircraft utilization

because:

Newer aircraft can be scheduled to fly more hours per day as they are more reliable and

require less maintenance than older aircraft; and

Staffs are able to achieve quick, efficient, airport turnarounds which enable them to increase

the number of daily flights per aircraft.

Strong brand and customer loyalty: Jet airways believe that they have established a strong

brand that helps to distinguish them from their competitors by identifying them as a safe and

reliable airline that is highly focused on customer service and that provides an enjoyable

flying experience. They believe that focus on every aspect of customer service, such as

choice of aircraft, aircraft interiors, and care of passengers in-flight and on the ground,

attention to detail, the convenient connections which they offer and high reliability, have

enhanced brand awareness and reputation for quality. (Roll, 2006) Jet airways believe that

their strong brand has enabled them to establish alliances with other leading brands for

unique frequent flyer programs, including with international airlines, domestic and

international hotels, and a car rental company and for a co-branded credit card.
Some of the key areas of customer focus are:

fleet of modern generation aircraft with custom designed aircraft interiors;

friendly and efficient in-flight service, with meals or heavy snacks being served on nearly all

flights;

high on-time performance;

tele check-in facilities for business class travelers and Jet Privilege members;

city check-in facilities in Mumbai, Delhi, Kolkata, Chennai and Bangalore;

same day return check-in facilities;

Jet Privilege frequent flyer program; and

e-ticketing in accordance with IATA standards and on-line reservations.

Jet airways also offer through check-in facilities to passengers of 11 leading international

airlines to and from our connecting destinations. They also believe that our five-tier "Jet

Privilege" loyalty program is an innovative program among those offered by other domestic

airlines in India. Jet airways believe they are meeting and exceeding our customer service

expectations. They have received numerous awards that recognize the quality of service,

including the Business World award for the most respected company in the travel and

hospitality sector in 2003 and 2004, the Best Domestic Airline of Asia by the Asian readers

of Travel Trade Gazette for the years 2003 and 2004 and the Financial Express Business

Traveler Award (Domestic Airline Category) for Business Class, Economy Class and Best

Service (Airport and In flight) in 2003 and 2004. (www4)

Motivated workforce and proven management team: Jet airways benefit from a highly

motivated workforce that brings high enthusiasm to air travel and a commitment to superior
standards of friendly and reliable quality service that believe distinguishes them in the

markets. Believing that the positive feedback they have received from their customers is

directly a result of the priority of their employees place on delivering top quality customer

service. Jet airways invest a significant amount of time and resources into carefully

developing the best training practices and selecting individuals to join team who share focus

on quality and improvement. Jet airways conduct ongoing training programs that incorporate

industry best practices and encourage strong and open communication channels among

members of their team so that they can continue to improve the services they provide. They

are led by a management team with significant airline industry experience. (www2)

Access to facilities at major airports: The major hub of operations is Mumbai where 19 of the

fleet of 42 aircraft are parked (of which 18 have been allotted overnight parking bays and one

aircraft is parked for a few hours at night), followed by 12 in Delhi, six at Chennai, three in

Kolkata and two at Bangalore. There access to overnight parking bays and landing slots at

these five hubs helps them to originate flights from these cities. It also enhances their aircraft

utilization and efficiency of their maintenance activities. (www5)

Extensive sales and distribution network: Jet airways have access to the sales and distribution

network of Jetair, which is a leading GSA in India with offices in approximately 69 locations.

Jetair represents, in addition to their, 15 international airlines in India. In addition, they are

represented by general sales agents in 74 countries outside India that sell and/or distribute

tickets to international in-bound passengers. The airline reservation system is hosted on

SABRE. Offers 24-hour reservation services on Mumbai, Delhi, Kolkata and Chennai. Jet

airways also have agreements with major GDSs, including Abacus, Amadeus, Galileo, Sabre

GDS and Worldspan. They have entered into interline agreements with major international

airlines and marketing cooperation agreements with three international airlines. They have

joined billing settlement plan programs in North America, U.K., France, Germany,
Switzerland and other key countries. It introduced e-ticketing and direct internet booking in

July 2004. The intend to encourage the use of direct internet bookings by their customers

because Jet airways believe it is an efficient distribution channel. (www5)