SM Center, Andheri-Kurla Road
Andheri East
Mumbai
India
Company Perspectives:
Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice carrier for the travelling public and set standards, which other competing airlines will seek to match.
Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations.
Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel--be a world class domestic airline.
Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth.
History of Jet Airways (India) Private Limited
Jet Airways (India) Private Limited is India's leading private airline. It boasts a market share of about 45 percent. Jet operates a relatively young fleet of Boeing 737 jets and ATR72 turboprops. It carries about seven million passengers a year. Its reputation for punctuality and outstanding service attracts a large proportion of business travelers. Jet's founder and chairman is Naresh Goyal, an Indian expatriate living in London.
Origins
Company founder Naresh Goyal began his travel career in 1967 at the age of 18 as a general sales agent (GSA) for Lebanese International Airlines. In May 1974, he formed his own company, Jetair (Private) Limited, to market other foreign airlines in India. Jetair eventually grew to a network of 60 branch offices.
After three and a half decades of monopoly by Air India and Indian Airlines, the Indian government reopened the domestic aviation market to private carriers in April 1989. Goyal set up Jet Airways (India) Private Limited in 1991.
Initial investment was $20 million. Through an Isle of Man holding company, Tail Winds, company founder Naresh Goyal (then based in London) owned 60 percent of Jet Airways, with Gulf Air and Kuwait Airways dividing the remaining 40 percent.
Jet Airways began domestic flight operations with four new-generation Boeing 737s on May 5, 1993. The first flights were from Mumbai (Bombay) to Delhi and Madras and ten other destinations. (Jet was not the first private airline in the skies; that distinction went to East West Airlines, which launched in February 1992.) Jet Airways aimed to carry seven million passengers by the end of 1993, and to take in first year revenue in excess of $75 million (INR 2.4 billion).
The schedule was coordinated with that of Gulf Air to provide convenient connections. Gulf Air assisted the new airline with technical and marketing assistance. The Australian airline Ansett Worldwide also provided engineering expertise, and was the lessor for Jet's first four aircraft.
Malaysia Airlines System (MAS) provided technical and flight training and performed maintenance services, while a unit of British Airways educated cabin staff in customer service. Three of Jet's Boeing 737s were leased from MAS. Jet entered a comprehensive marketing agreement with KLM in 1995.
Surviving and Thriving in the Mid-1990s
Eight private airlines plied the skies over India in the mid-1990s. Jet Airways was the second largest. Revenues for the 1994-95 fiscal year were estimated at INR 360 crore ($120 million), with profits of more than INR 18 crore ($6 million), crore being a traditional term meaning 10 million.
Jet Airways claimed to be the only profitable privately owned airline in India. Indeed, by 1997, five of the seven that had been launched since 1992 were grounded. By another count, more than 20 start-up airlines had been launched in India since deregulation, reported Airline Business. Jet Airways was one of the very few survivors.
Jet's revenues rose 32 percent to $300 million in 1997, with profits of $11 million. During the year, Jet bought out the shareholdings of Kuwait Airways and Gulf Air after the Indian government banned foreign ownership in India's airlines. This also scuttled MAS's proposal to acquire a 9 percent stake in Jet Airways.
In 1997, Jet Airways was operating a fleet of one dozen Boeing 737s and was ordering ten more for $486 million. By this time, Jet was India's largest private carrier, and was flying to 20 destinations. Its market share was about 15 percent. Jet Airways Executive Director Saroj Datta (formerly of Air-India and Kuwait Airways) told Britain's Financial Times that the airline's choice of newer aircraft was a significant factor in its success. While they cost more to lease, they saved fuel and helped endear business travelers with their reliability. Datta added that Jet benefited from Goyal's background as a general sales agent; it had established interline agreements with 90 foreign carriers flying into India, accounting for 25 percent of revenues.
Late 1990s Price Wars
While the Tat industrial group was unable to secure government approval to create a proposed carrier with Singapore Airlines, the domestic aviation market remained competitive. As demand contracted, rivals engaged in a spirited price war, particularly on the Mumbai (Bombay) to Delhi route.
Nikos Kardassis, Jet's chief executive officer for five years, resigned in the summer of 1999. He was replaced by Executive Director Saroj Dutta, who had been with the airline since 1992.
In 1999, Jet Airways was flying 155 flights a day to 30 destinations. The fleet was up to 25 aircraft, and the airline employed 4,300 people. Jet estimated that it had a 32 percent market share and that 80 percent of its passengers were business travelers.
In October 1999, the airline launched a regional feeder network using leased 64-seat ATR 72 turboprop aircraft. Jet Airways unveiled new uniforms for its 270 cockpit crew members and 660 cabin staff about the same time as the ATR rollout. Designed by Ravi Bajaj, the new uniforms were a year in the making.
Changes in the Early 21st Century
Jet Airways got a new CEO in 2000, Steve Forte, formerly vice-president of marketing at the U.S. carrier TWA. Forte, a native of Italy, also had worked for Meridiana, a small Italian domestic airline, when its aviation market was undergoing liberalization. Forte left the airline in December 2002 to return to the United States. He was replaced by Wolfgang Prock- Schauer, a former Star Alliance board member. In May 2003, Jet hired its first chief operating officer, Peter Luethi.
The air travel market in India was making up for lost time after being flat for a couple of years. Jet and other airlines were appealing to the government to reduce the tariffs on India's relatively expensive aviation fuel, as domestic carriers paid a $2 per gallon premium compared with foreign ones. Chairman Naresh Goyal told the Hindu the airline planned to connect to all of India's tourist destinations. Jet also was increasing frequencies on key routes.
According to India Business Insight, Jet Airways' share of domestic passenger traffic rose to 48.7 percent, or more than six million passengers, in 2002. Although the company had reportedly been profitable from its inception, it was now posting significant losses despite total revenue in 2003 of INR 2,876.41 crore ($550 million).
Business Today observed that interest costs had risen 50 percent during the year; fuel costs were also up sharply. The effects of the September 11, 2001 terrorist attacks on the United States, and, later, the SARS health crisis, took their toll on traffic for not just Jet Airways, but most airlines.
Controlling costs was CEO Wolfgang Prock-Schauer's primary agenda. The airline leased two of its Boeing 737s to a Japanese company, and implemented a number of workforce productivity measures. Prock-Schauer aimed for Jet to be posting a profit of $60 million by 2005.
The airline was introducing ultra-low "Super Apex" (advanced purchase excursion fares) tickets to lure passengers away from trains. Passenger demand fell slightly, however, and Jet reduced capacity on some routes and began assigning employees multiple roles and cutting capacity on various routes. A charge card for frequent flyers had been launched with Citibank in August 2000.
International in 2004
Jet Airways and rival private airlines in India were freed to begin flying outside the country on March 22, 2004. Colombo, Sri Lanka, was the first such international destination. Flights to Bangladesh and Nepal followed soon after.
Jet was poised to profit from an expected extension of flying rights throughout Asia. An initial public offering of 25 percent of shares, discussed since 1995, was also in the works. Jet had borrowed about $800 million to finance new aircraft.
Principal Competitors: Air Deccan; Air-India Limited; Air Sahara Limited; Indian Airlines Ltd.
Related information about Jet Airways
Jet Airways is an airline based in India serving domestic and international routes. The
airline operates over 320 flights to 44 destinations across the
country and 5 overseas, with the majority of flights operated from
Chhatrapati Shivaji International Airport, Mumbai. It commenced commercial
airline operations on 3 May 1993 with a fleet of 4 Boeing 737-300 aircraft, with
24 daily flights serving 12 destinations.
In 1991, the late P.V. Naresh
Goyal, who already owned Jetair (Private) Limited which
provided sales and marketing for foreign airlines in India, took
advantage of this opportunity to branch out into the airline
business by setting up Jet Airways as a "top notch" value-for-money
full service scheduled airline that would give wholly state-owned
Indian Airlines
a good run for its money. (Indian Airlines had enjoyed a total monopoly in the
domestic market between 1953 when all major Indian air transport
providers were nationalised and the early 1990s when the Indian
Parliament repealed the "Airways Corporation Act", which had been
the legal basis for nationalising various privately owned Indian
air transport providers at the time.)
Brand Ownership
As far as Jet Airways' internal commercial arrangements are
concerned, it is of particular interest to note that the airline
does not own its brand. This arrangement is very similar to the
terms governing the use of the "easy" brand by the easyJet Airline Company Limited
(the name under which easyJet has been incorporated). Under the afore-said
arrangement, Sir Stelios Haji-Ioannou, the founder and largest individual
shareholder of easyJet
Airline Co. International destinations include Kathmandu, Colombo, Singapore, Kuala Lumpur and London's Heathrow
Airport. It commenced international operations in March 2004
between Chennai and
Colombo after it had
been cleared by the Government of India to operate regular,
year-round scheduled services to international destinations located
within all SAARC countries
other than Pakistan. Furthermore, the Government of India was
unwilling to extend insurance cover it was providing to both
Air-India and Indian Airlines for
their operations to/from Pakistan as well as through Pakistani air
space to wholly privately owned carriers.)
Subsequently, a second route linking Mumbai with Colombo and a new route between Delhi and Kathmandu were added. Bahrain, Kuwait, Oman,
Qatar, Saudi Arabia and the
UAE, for a duration of three
years from the date of implementation of the new policy, provided
that they had at least five years' continuous commercial airline
experience and that their fleet numbered at least 20 aircraft in
the "large transport category".
The decision to specifically exclude privately owned carriers from
flying to any destination in the Gulf countries for three years was
an important concession to both Air-India and Indian Airlines, India's two wholly government-owned
"flag carriers", for both of which these countries collectively
constitute the largest overseas market (in terms of passengers
carried) as well as an important revenue generator and source of
profits.
Another important "side-effect" of this stipulation was that apart
from Jet Airways itself Air Sahara was the only other privately owned Indian
carrier permitted to operate international scheduled
services.
Initially, Jet Airways sought to take maximum advantage of this
ruling by adding new international scheduled routes to destinations
within the commercially viable flying range of its growing fleet of
"Next Generation" Boeing
737-700/800 series narrowbodied jets, such as Singapore and Kuala Lumpur. A couple of
737NGs equipped with
winglets for greater
fuel efficiency, improved range and reduced engine "wear-and-tear"
were specifically ordered and subsequently joined the company's
fleet to serve these destinations.
This first led to a decision to lease three Airbus A340-300E widebodies
from South
African Airways to enable it to commence non-stop flights to
London Heathrow
in the UK and to subsequently place a large order for a fleet of
brand-new Airbus
A330-200 and Boeing
777-300ER widebodied airliners to permit further expansion,
especially to additional destinations in Europe and North
America.
At present (2006) Jet Airways has international services to
Kathmandu, Colombo, Singapore, Kuala Lumpur, London Heathrow,
operating from Mumbai,
Delhi, Chennai and Amritsar.
Jet Airways and Air
Sahara were the only private airlines to survive the Indian
business downturn of the early 1990s. The resulting airline would
have been the country's largest news.bbc.co.uk/2/hi/south_asia/4626810.stm but the deal
fell through in June 2006.
Jet Airways has begun thrice-weekly operations from the north
Indian city of Amritsar
to London
Heathrow. The service will operate three times a week from
Friday-Sunday using the airline's recently delivered Airbus A330-200.
Interestingly, Jet Airways stated in its latest published annual
report covering the 2005/6 financial year that its domestic
operation still accounted for the bulk of its profits in spite of
increased competition from rapidly expanding low cost carrier
Air Deccan and
several other recent start-ups, which has resulted in Jet Airways
domestic market share declining to below 40%. They furthermore
attribute the company's losses on the UK routes to the fact that
the Jet Airways brand is still relatively unknown in the UK
vis-a-vis the big, established carriers such as British Airways,
Virgin Atlantic,
bmi, Emirates etc., especially among
UK-based corporate business travellers who account for the bulk of
all premium travel between India and the UK and who are the
airlines' most profitable customers. Gatwick, Manchester, Birmingham, Glasgow etc., most of which are served by other carriers
that can offer competitively priced and relatively convenient
connections from these airports via their hubs to India (e.g.
Emirates via Dubai or KLM via Amsterdam-Schiphol).
Jet Airways should be able to take maximum advantage of the greater
fuel efficiency of its twin-engined fleet of A330s and B777s (compared with the A340) once these have been delivered in sufficient
numbers to the airline to be deployed on its UK and other planned
long-haul schedules.
Controversies
Jet Airways was expected to begin service to Newark via Brussels in June 2005 but a problem arose in March 2005,
when the airline submitted an application to the U.S. Department of
Transportation. based in Bethesda, Maryland, opposed the application in letters to the
Transportation Department alleging trademark
infringement. Though the litigation is still unresolved, the Department of
Transportation concluded it was not a reason to prevent Jet from
flying to the U.S.
A second and more serious allegation delaying Jet Airways being
permitted to fly to the USA focuses on its opaque ownership
structure as well as its alleged links to organised crime in India
and abroad. Jet Airways was originally set up as a subsidiary of
Tailwinds, an Isle of
Man based holding company designed as a tax shelter, whose sole
shareholder was Naresh
Goyal, the airline's NRI
founder and chairman. Initially, both Gulf Air and Kuwait Airways had acquired minority stakes in the
airline.
As a result of this ruling Gulf Air and Kuwait Airways sold their stakes to Naresh Goyal who then
became the airline's sole shareholder. 20% on the Mumbai stock exchange in 2005 to
enable it to reduce the debts that had been accumulated since its
inception as well as to fund its ambitious fleet expansion
programme, including the acquisition of a sizeable fleet of brand
new Airbus A330 and
Boeing 777 long-haul
widebodied jets to operate new long range services, primarily to
Europe and North America. While Indian government officials have
been satisfied that these arrangements do not compromise Jet
Airways' status as an Indian-owned airline that is effectively
controlled by Indian citizens, they are viewed as "problematic" by
the American authorities.
Another issue that is "problematic" in the eyes of the US aviation
authorities and has contributed to delaying Jet Airways being
granted a foreign carrier permit to enable it to commence
commercial airline operations in the US is the controversy
surrounding Naresh
Goyal's actual citizenship.
If these media reports turn out to be true and Jet Airways is
effectively controlled by Naresh Goyal through his majority ownership of
Tailwinds, the US authorities mulling over the company's
application to begin commercial operations in the US may construe
this as a violation of the recently concluded "open skies"
bilateral air services agreement between India and the US as well
as international aviation law, which state that an airline must be
substantially owned and controlled by citizens of the country where
it is based in order to qualify as a "flag carrier" representing
that country. This, in turn, could lead the company's Indian-based
competitors to complain to the Indian authorities that Jet Airways
was not a "genuine" Indian flag carrier and might potentially
result in competitors applying for the revocation of Jet Airways'
operating permit and traffic rights (in India and abroad).
Rumours have circulated in the past that Tailwinds might act as a
front for foreign airlines or possibly even Dawood Ibrahim, India's
most wanted criminal, as well as global terror organsiation
al Qaeda. Since
Dawood Ibrahim's
name is on Interpol's most wanted list and has been declared a
terrorist by the US government, the US authorities' review of Jet
Airways' application for permission to commence regular commercial
airline operations between India and the USA by being issued with a
so-called "foreign air carrier permit" (which requires the
signature of the US President) is unlikely to be granted any time
soon, especially in the current global security environment.
The latest controversy that could tarnish the airline's reputation
in the UK, its most prestigious and potentially largest overseas
market, arose when Asmin Tariq, a former British-born contractor of
Pakistani descent who was working for the airline as a security
agent at London's Heathrow Airport and was subsequently made a member of
staff when the airline decided to bring its London-based security
operation in-house, became implicated in the foiled terror plot of
August 10,
2006 to blow up over several weeks up to ten transatlantic
airliners belonging to three different US airlines in mid-air on
their way from London-Heathrow/-Gatwick to New York JFK/Newark and Los Angeles/LAX
airports. When asked how such a person could have been employed by
the airline in a position demanding extreme confidence and trust,
Jet Airways defended its conduct by issuing a statement on its web
site saying that the aforesaid person was a UK passport holder who
had passed the stringent security requirements of BAA, Heathrow's owner and operator, and that under UK
employment legislation the company was obliged to offer any
permanent appointments to former contractors once the contract that
formed the basis of their original employment had been
terminated.
Industry Data
Following approval to begin long-haul operations to London, Jet
Airways sub-leased 3 Airbus A340-300E from South African
Airways.
Jet Airways has an order for 10 Airbus A330-200 aircraft (with options on a
further 10 aircraft) as well as an order for 10 Boeing 777-300ER.
The Jet Airways fleet consists of the following aircraft (as of
August 2006):
Aircraft Number
- 3 Airbus
A340-300E
- 1 Airbus
A330-200
- 2 Boeing
737-900
- 23 Boeing
737-800
- 13 Boeing
737-700
- 6 Boeing
737-400
- 8 ATR
72-500
Total - 56 aircraft
The average age of Jet Airways fleet is 5.1 years in July
2006.
Jet Airways has commercial agreements with the following
airlines:
- British
Airways
- Lufthansa
- KLM
- Northwest
Airlines
- South
African Airways
- Qantas
- Gulf
Air
- Austrian
- Thai Airways International
- Swiss International Airlines
Jet Airways is also a potential future member of the oneworld alliance fact.
Merger With Air Sahara
On January 19,
2006 Jet Airways announced
that it was to buy Air
Sahara for $500 million in an all-cash deal.
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