On Wednesday last week, as I was queuing up to board an Air India flight to Delhi, I could see the tarmac at the Mumbai airport lined up with idling aircrafts of Jet Airways, whose operations were being cut down by the hour. Eventually, by evening the airlines shut down its operations completely, albeit “temporarily” as per the company’s statement. And in a twinge of irony, the last flight was a Jet Connect flight from Amritsar to Delhi that landed in Mumbai in the wee hours of Thursday. I say “in a twinge of irony” because one of the reasons for the airline to get caught in turbulent weather, was its many experiments in positioning wrongly so, trying to compete with budget/low-cost airlines with Jetlite, Jet Connect and so on, when it hit financial air pockets way back in 2009 and later.
Unlike this generation, people born before the pre-liberalisation took their 1st flights when they started working! So did I. Way back in the early 1990’s for the initial few years, it was all Indian Airlines for work related trips. Though Indian Airlines in that period wasn’t bad, when Jet Airways burst into the scene, post opening of the sky along with other private airlines like East-West, Damania, Modiluft and so on, it brought in a whiff of fresh air. I remember vividly those times. The airports with inadequate infrastructure to handle the explosion of airlines and traffic, by and large resembled railway terminus’s and bus stations with multiple loud announcements of arrivals, departures and boarding calls. “Chaotic” was an oft-repeated description of airports, then.
Amidst all the initial slew of private players, only Jet survived. It is clear that Naresh Goyal, the original promoter of Jet Airways had mastered the one core competency that mattered to excel in business in India – that is of “managing the environment”! But, I must admit that apart from managing the environment, Goyal could get another aspect of business right. That is of managing customer needs and experience well.
In those initial days, – I am referring to the mid 90’s, Jet Airways experience was really out of the world, particularly for frequent flyers. You could tele-check in and get your favourite leg space seats without much of an issue. Upgrade vouchers could actually be used to upgrade to business class even at the airport while checking in. There was a wide variety of meal options apart from just Veg and Non Veg. In fact for breakfast, in Vegetarian, they used to have South Indian and North Indian choices! Dinners were 3 course meals. Hot and cold towels were provided even to Economy passengers! You could redeem your award tickets without much fuss and disappointment. In the initial few years, one needn’t pay even the taxes for award tickets (That changed pretty soon). With fares almost same as of other airlines, there was no reason unless otherwise the flight was full, to look at alternative airlines! I can say that from a user perspective, it was truly a golden era for Jet Airways!
The golden run for the airline continued in the 1st decade of this century, but with conditions attached. This was when it became a market leader by way of market share and leadership pangs started catching up. But still, due to its superior service and its On-time record, it was business travellers’ first resort.
The advent of low cost or budget airlines in the scene in India somewhere around 2006, must be one watershed moment in the history of Jet Airways. Captain Gopinath, the founder of Air Deccan redefined airline business in India with his no frills, low-cost offering exemplified by R.K.Laxman’s “common man” as the brand mascot. By lowering air fares to the extent of making it cheaper than train fare, Gopinath ushered in a whole set of middle class travellers into flying. In doing so, Gopinath with Air Deccan became of subjects of case studies in B-schools. The whole landscape of air traffic changed so fast in that period that, Air Deccan with its mindless pricing strategy, ended up disrupting itself and few other airlines on the way.
The global recession of 2008 and the cost consciousness that ensued among corporates world over, brought the curtains down on the party of the expensive, premium priced, full service airlines. In India, it meant Jet and Kingfisher who were truly premium, full service airlines at that time. This is where, I feel Jet was caught in the wrong foot. When it started losing market share to low-cost air lines and new entrants like Indigo, Go Air, Spicejet… Jet decided to pursue its own “budget airline” strategy which in my mind was a big mistake. Extending the brand is a trap which many companies fall into, with their eyes wide open. Here, Jet Airways, hither to a market leader with a full service offering and impeccable service reputation, decided to extend its brand and launch a budget airline called Jetlite and then later Jet Connect. At the outset, it seemed like a smart strategy to prevent losing market share to the newly launched low-cost carriers, that too in those prevalent muted global economic conditions.
In the process, what happened was a systematic dilution of the brand equity of Jet Airways and all it stood for. In the name of cutting costs, service offerings were trimmed. It was no longer a frequent flyer’s delight. Service started falling apart. I started seeing the writing on the wall sometime in 2011/12. You could never get a seat of your choice even when you web checked in early! Choice of food became limited. For a flight taking off at 7.30 pm, instead of dinner, a snack meal was beginning to be served! Even the After mint (post meal mouth freshener) which was served in Jet Airways in the beginning, which became so popular that it was sold in super markets and stores as Jet Mukhwas suddenly disappeared from the in-flight meal. Here, I must add that I have seen many passengers asking for extra sachets of the same and hoarding them to their homes! Award ticket redemption process now online, became a farce. There were just few seats for award tickets in a flight and you would never get them. If you redeem award tickets for your family, seldom you will get confirmation of the same while you book. Upgrade vouchers became just pieces of paper because upgrades were limited to few fares.
In the midst of all this, Jet’s financial woes only multiplied. A mistimed acquisition of Sahara Airlines only worsened the situation. Few quarters back, realising its original mistake of taking the budget airline route, Jet jettisoned its low-cost brands and decided to stick to just its full service offering. Considering the fact that global economy had revived, I thought that it was a wise move and hoped that Jet will soon be back to its glory! Well, it did not. The low-cost hangover continued. The pricing was of full service. But the service was of budget airline! Can you imagine as recently as in Feb, on a 5 and a half hour flight from Mumbai to Singapore, there were no personal screens and one had to really sleep through to kill time? And my co-passenger who requested for a glass of water got it after reminding the crew for the same at least 3 times! And of late dinner served in Jet Airways resembled more like junk street food! And I can only say that Jet’s frequent flyer programme – Jet Privilege which was once upon a time really world-class, is a pale shadow of its former self! Jet Privilege was such a strong brand that Goyal hived that off as a separate entity and monetised it. Even that infusion didn’t help to improve the user experience, though. Keeping the financial troubles aside, I was of the opinion that Jet was sinking as a brand anyway! And the culprit was its positioning! Was it a full service airline with offerings of a budget airline or was it a budget airline that was overpriced??
What if, had Jet continued to stay the course of a full service airline?
What if, in that period when low-cost airlines were mindlessly cutting prices, had Jet focused on “business value flyers” and on superior service?
What if, had Jet went after bottom line instead of preserving market share in that turbulent economic period?
So many what ifs! As I said, in hindsight, pontification is easy. But this hold lessons for companies for the future. After all, business cycles repeat themselves.
Having said that, singling out Jet is also a tad unfair. Airline business globally is a tough business to wade through. One that requires continuous infusion of Capex and which sucks up huge Opex. Only airlines that have thrived are those protected by state monopolies or those who have got their positioning and cost efficiencies correct. In India, the woes of Airline industry have been compounded by high taxes, fluctuating fuel prices, high interest rates and crony capitalist policies. In the history of Airline Industry, Jet is only the latest to bite the dust. Before, we had East-West, Modiluft, Damania, Air Deccan, Sahara, Kingfisher, Alliance Air and myriad other smaller airlines which all exited the scene in one pretext or the other! And we all know how Air India has managed to pull through while being in ICU for so many years. And it is also clear that the other airlines are all clutching at straws and managing to stay afloat. That must really beg some critical policy related questions among the policy makers in India. While on the one hand trying to expand air travel to smaller towns in India, is the current Aviation policy regime really business friendly?
Seeing an Indian brand, which was once upon a time close to world-class fold up, is really unfortunate. Hope wisdom and luck prevails and we soon see Jet get its Jetwings of yore!
Image courtesy: https://www.thenational.ae
6 thoughts on “Jet Airways – Positioning lessons from its crash landing!”
Well written Anand ! One another point was, both Kingfisher and Jet went on a buying spree of new generation aircrafts at a wrong time (peer pressure ?!). At the end, both ended up with the same result.
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Yes, Sundar. I agree. Thanks for the feedback
Anand, as always, a very thoughtful analysis.
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Thank you very much Vaibhav.
Wonderful writeup. Very sad to see Jet Airways shut. Airline business is certainly one of the toughest to sustain. Customer expectations are very high always irrespective of what they pay as flying instead of a train journey in the minds is still a premium experience for many.
According to me both Jet & Kingfisher made their biggest mistakes by buying Air Deccan & Sahara
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Thanks Dilip. Yes, Airline biz is one of the toughest! I agree abt the mistakes of Goyal & Mallya!