TURBOCHARGING JET AIRWAYS PART 1
By Rishul Saraf
Jet Airways is a pioneer in Indian aviation. From the earliest stages of India’s economic liberalisation, with a fleet of just four Boeing 737-300 and 737-400, Jet Airways grew to reach a fleet size of over 92 aircraft, by 2008, and become a dominant force in Indian aviation.
Since then, due to recession, competition and some say waning political clout, the airline and its brand have been on a downward slide. Jet’s finances look bleak and their operations, especially domestic, appear muddled.
Despite these setbacks, Jet is, in my opinion, the Indian carrier with the highest potential to bounce back to consistent profitability and become the iconic brand of Indian aviation once again. To achieve this, the airline needs to re-energise its operations, remove brand confusion, and address some major hindrances it is facing, and will encounter, in overseas markets.
Along with the main brand, Jet Airways offers two low cost brands – JetLite and Jet Konnect. These two low cost brands, which operate only domestic flights, constitute over 75% of Jet’s total domestic available seat kilometre (ASK) capacity; and one can infer by extension, the revenues.
The Jet Airways flights, offer a full service Economy, i.e. meals and soft-drinks included, and Club Premiere, the business class. The erstwhile Air Sahara acquired by Jet, was renamed to JetLite and is operated as a low cost service, but with a separate air operator’s permit (AOP). All Jet Airways flights are coded 9W while JetLite is S2.
During the 2008 economic slowdown, the low fare brands of IndiGo, SpiceJet and GoAir experienced a meteoric rise. To address rapidly eroding marking share, Jet wanted to increase its low cost capacity, but did not want to dilute the main Jet Airways brand. Jet could not increase JetLite capacity, since it was involved in litigation with the previous owners of Air Sahara at that time. Jet Airways instead came up with Jet Konnect service in which, under its existing air operator permit (9W), it converted much of its mainline dual class Boeing 737 fleet in to an all economy class low cost service. Once the market recovered, Jet converted some of the Konnect aircraft to feature business class seating (2+2 in each row), but, to prevent confusion with its mainline Club Premiere, labelled this class as Konnect Select, and called it an “economy plus” cabin, even though for all practical purposes it is a business class seat.
While Konnect helped Jet Airways compete with the low fare carriers during lean times, and Konnect Select enhanced incremental revenues, this flooding of new brands on a less than stable base, confused passengers, and has resulted in fragmenting the unified and powerful brand the carrier once commanded.
|The first Jet Airways Konnect flight lands at Bangalore International Airport|
Now, both Konnect and Konnect Select brands’ have run their course, very rarely will one find a Low Cost Carrier running under the same brand as the parent full service carrier. For any organization to have various brands makes sense only if they are differentiable in terms of product prices, features, etc. Jet has failed in both these aspects.
Going forward, Jet must eliminate its low cost brand confusion by consolidating and developing a distinctly separate and strong low cost brand. The additional air-operator permit (AOP) of JetLite is the perfect vehicle. It has the needed separation from the full service Jet Airways, can compete with low cost carriers not just from India but from overseas, like AirAsia, flyDubai, and others.
This will also allow Jet to focus on full service and premium traffic and compete with mainline carriers like Emirates, Qatar, Etihad, Thai, Singapore Airlines, and others.
JetLite continues to be a liability for Jet, apart from having a poor brand image in the market, JetLite continues to lose money year after year. A single unified low cost carrier, will help Jet remove these negative JetLite impacts once in for all.
Rishul Saraf is an aviation enthusiast for the last three years when not engaged as an Engineering student. He has a keen interest in Jet Airways.