Jet Airways Naresh Goyal Case Study Analysis

8/10/2019 Jet Airways Naresh Goyal Case Study Analysis

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2014

Shivam Bajaj 130085

GDGOENKA WORLD INSTITUTE

LANCASTER UNIVERSITY

11/27/2014

Case study report


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ACKNOWLEDGMENT

I would like extend my thanks to Mr. S. Das, our module leader for guiding us and bestowing Knowledge upon us.

His motivational skills have and support contributed largely to my case analysis. While working on the case I have

enriched my knowledge base and adapted the learnings to my thought process.

I am truly grateful to my colleagues for their help, support, and providing me with valuable insights wherever I

required them which helped me throughout the course of writing the report.


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CASE BRIEF

INTRODUCTION

Founder: Naresh Goyal

Before the inception of Jet airways he worked around in the same industry viz. cashier at continental travels, salesagent at Lebanese international airlines, PR manager at Iraqi airways etc. Doing so he developed know how and

contacts in aviation industry.

The company initially started as a representation providers in sales and marketing for airlines like air France,

Austrian airlines and Cathay pacific.

The major development of liberalization in 1991 was point in time which lead to Naresh Goyal starting up his own

airlines by leasing 4 Boeing 737 backed up by Gulf air and Kuwait airways.

Commenced commercial operations on 5thmay 1993. In first year of operation, no. of passengers served were

730,000/-. In 2005, the company, had 55 aircrafts, served over 10 million people and generated revenues of USD

1.4 billion.

It uses five hubsMumbai, Delhi, Chennai, Kolkata, and Bangalore. It has scheduled services in 42 destinations and

over 1,924 flights a week.

Their strategy was clear: serving the business traveler in India. Their services are directed towardsthe

convenience of the business traveler like tele-check-in, priority service, same day return flights, e-ticketing etc.

High daily aircraft utilization is maintained at Jet airways. It enhances the efficiency of its operations and generates

more revenue and is achieved in part by reducing turnaround time at airports in order to fly more hours on an

average in a day. Another source of revenue is carriage of cargo, consisting courier, postal mail, and commercial

cargo.

Its market share peaked at 46% but has fallen to 35% since the launch of aggressive new low-cost carriers such as

Air Deccan, Spice Jet, Indigo, Go Air, etc.

However, the acquisition of Air Sahara by Jet Airways on 13 April 2007 is indeed a positive development for Jet

Airways. The takeover has propelled Jet Airways as the largest private airline in the country having a fleet size in

excess of 80 aircraft and around 42% of the market share.

ASSUMPTIONS

The discussions and analysis that will follow are subject to scope of the given case study and not the information

available outside it.

Only analytical tools and theories to support the study and analysis are beyond the scope of the given case.


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ANALYSIS OF DATA

The primarily conspicuous problem that has to be addressed is that the domestic market growth rate is approx.

25% in comparison to the growth in yield and revenue of Jet airways (refer table 1.2). This implies that there is

considerable rise in new entrants and growth of competitors which can be a major obstacle in future sustainable

development of jet airways.

The above mentioned charts signify that Jet airways is doing well in respect of growth in revenues and increasing

customer base but it is observable that the number of domestic stations served has decreased by 3 stations and

there is an addition of 1 international station. Hence it becomes necessary that their strategy should be in line with

growing market environment.

0.6

0.605

0.61

0.615

0.62

0.625

0.63

0.635

0.64

0.645

2002 2003 2004

Passenger load factor

Passenger load factor

3700

3800

3900

4000

4100

4200

4300

4400

4500

4600

4700

2002 2003 2004

Average revenue per passenger

Average revenue per passenger


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SWOT

Internal:

Strength

ISO 9001 certified

Largest video touch screen

Renowned for good meals even during non-meal flight timings

Biggest domestic airlines

Award holder by many institutes

High daily aircraft utilization

Weakness

Targets only Business class

High risk of delays (Due to over high daily aircraft utilization)

External:

Opportunity

Market in growing phase

Having 42% share in the domestic market

Unpenetrated potential markets

Threats

Cheaper airlines

Security requirements;

Air traffic and airport congestion;

Adverse weather conditions, especially in North India during winter months;

Defects or mechanical problems with the aircraft of the airline;

Unavailability of cockpit and in-flight crew;

Strikes or work stoppages; and

Acts of third parties upon which the airlines rely for requirements, such as, fueling and

maintenance


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PORTERS 5 FORCES ANALYSIS

THREATS FROM NEW ENTRANTS

(LOW)

Huge capital investment

Low profit marginsDomestic market at growth stage

Government policy

Difficulty in differentiation

Huge Switching costs

Proprietary products

SUPPLIER POWER(HIGH)

Rising costs of fuel

Mainly 2 suppliers: Boeingand air bus

Limited availability of skilledand technical (aviation)

employees

DEGREE OF RIVALRY(HIGH)

Competitors like Kingfisher, IndianAirlines, Indigo, spice jet etc.

Industry sensitive to economic cycles

Predatory pricing

Ambush marketing strategies

Brand identity

BUYER POWER(HIGH)

Internet bookingcomparison makes more

informed customers

Limited Buyer volume

Price sensitive Indiancustomers

No switching costs

Substitutes available

THREAT OF

SUBSTITUTES(HIGH)

-Low cost airlines present in the market-Trains are a major threat

-Price-performancetrade-off of substitutes

THREATS FROM NEW ENTRANTS LOW

SUPPLIER POWER HIGH

DEGREE OF RIVALRY HIGH

BUYER POWER HIGH

THREAT OF SUBSTITUTES HIGH

Now we can observe here that the market has low restrictions to entry and there are high restrictions to exit.

Hence it is imperative for jet airways to strategically position themselves to increase the barriers to new entrants

so as to gain excess market share. There is a dire need for jet airways to draft a strategy to maintain market

leadership and they can exercise their current supremacy and holding to take proactive measures.


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OPTIONS & ALTERNATIVES

PORTERS GENERIC STRATEGIES

Competitive advantage

Adapted from porter 1990

Here the company has 3 alternatives:

1. They can go for cost leadership, but for jet airways this is a highly unlikely option as they are positioned as

a brand for the business traveler. If they take up cost saving no frill methods of operations, they might

lose their niche that they have developed.

2. Differentiation is the one of the preferable option for Jet airways as they are currently operating under

the same and if they effectively perform on the same basis, the just might gain intrinsic niche in their

target market.

3. Focus is also a narrower approach which yet another option at the present market growth rate. Right nowthe company needs to have a broader approach to gain in accordance with the increase in the market.

Jet airways are currently following a mix of differentiation and focus techniques as they have multiple awards for

quality and they focus on business class. Their competitors are low cost airlines. They have the option to either

continue with the same strategy or strive to achieve cost leadership too and attain market dominance.


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ANSOFF MATRIX

Jet airways can use Ansoff matrix to determine the most appropriate alternative for them:

They have the option of market penetration i.e. they can attempt to gain more market share in the current

scenario by either product differentiation or providing the same quality at a lower price to fend off competition.

They can also go for prospecting new target market. Currently they focus on the business class and the frills and

add on services for them. They should contemplate about tapping undiscovered potential market as India has a

huge population and most of it is untapped market as they are focusing solely on the business class

They can try to come up with a new product all together, but switching cost in the aviation industry is too high

hence this option is prima facie unfeasible.

Diversification is also an option open to them but it is not advised at the moment as current scenario demands

them to focus on retaining their market share and if they invest into another industry, they might not be able to

invest the required capital in their current business and lose to competitors.


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CONCLUSION & RECOMMENDATION

Jet airways should try to tap into other market segments lest they lose the market share to new low-cost

competitors.They are one of the select few airlines in the whole world to receive ISO 9001 certification. The

acquisition of Air Sahara by Jet Airways on 13 April 2007 for 14.5 billion was a very impactful and positive

development for Jet airways that lead the company to being a market leader. In order to aggressively fend off

competition they need to develop the market and go for cheaper market segments and provide superior quality at

a lower price as they ae currently known for their quality but cater only to premium/ business class. Pricing and

Revenue Management should be re-invented so as to cater to a wider range of customers which shall enable them

to gain more market share and facilitate to bear the fruits of a growing industry. Jet Airways started its operations

with the new Boeing 737-400s, and not the older Boeing 737-200s, these new aircrafts were fuel-efficient and

cheaper to maintain hence giving an edge to jet airways in respect of cost optimization. They should re-invest and

optimize their operations to a level where they themselves become a threat to new entrants.

It is fairly obvious that the service tracker questionnaire is way better than SERVQUAL. The service tracker is

drafted focusing on the customers of jet airways and in line with the services provided by them while Servqual is

generic though widely popular. The targeted questionnaires of the service tracker is more relevant and

appropriate. Jet airways receives and analyzes over 57,000 service tracker questionnaires every month, where

passengers are asked to evaluate all its services on a four point scale. The service tracker audits the quality of in

flight and ground services which is undertaken by a services and product quality team. They strive to resolve ASAP

to any customer complaint. The service tracker is a better instrument that provides information which if resolved

facilitates to meet and exceed thecustomers expectations where SERVQUAL may not provide the same relevant

information.The service tracker instrument is far more comprehensive than Servqual and is fundamentally based

upon the sequential incident technique.

The current yield management system (Sabre) that receives prompt information about the passengers filled is

state of the art but has room for improvisation. Their systems can be modified to automatically reduce the flight

fares with a predefined time duration before the take-off while considering the number of vacant seats. This way

rather than just knowing how many seats are vacant, they can still generate revenue; even though the profits per

passenger may reduce but the overall profitability shall increase.


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EXHIBIT 2.1

We look up to you to help us serve you better

JET airways

THE JOY OF FLYING

Dear Passenger,

Thank you for choosing to fly with us. On behalf of the entire Jet Airways family, I am delighted to welcome you on board our flight.

For us taking care of you is not just good business but indeed an enduring commitment. We always seek the views of customers such as yourself to help us

serve you even better.

I will therefore be very grateful to you if you spare some of your precious time to fill-in this Service Tracker. As the Tracker is a service quality survey it is

not designed to enable you to provide specific feedback. You may, however, for any specific feedback, request our cabin Crew for a Comment Form.

Once again, we are delighted to have you on board and wish you a very pleasant flight.

Warm Regards,

Wolfgang Prock Schauer

Chief Executive Officer

Flight No. 9WFrom.To.

Date..Seat No.

Class of Travel o Club Premiere o Economy

1. Frequent Flyer Programme

a. Are you a Jet Privilege member

o Yes (Your JP Membership No) o No

b. Your current JP membership status

o Platinum o Gold o Silver o Blue Plus o Blue

2. Reservation

a. Where did you make your reservation

o Jet Airways Reservation/Ticket Office o E-ticketing o Travel Agent

b. In Which city did you make your reservation

o Excellent o Good o Average o Poor

c. In case you used the Jet Airways website (www.jetairways.com), how do you rate it for

i. Ease of navigation o o o o

ii. Ease of online booking o o o o

iii. Information provided o o o o

3. Accessibility

a. Accessibility of our telephone nos.

i. Reservations o o o oii. Airport o o o o

iii. Tele check-in o o o o

b. Handling of Tele check-in/Enquiry

i. Staff efficiency o o o o

ii. Staff courtesy o o o o

c. Overall rating for Accessibility o o o o

4. Airport Services

a. Baggage security screening

i. Time taken o o o o

ii. Assistance provided o o o o

b. Check-in procedures

i. Where did you check-in for this flight

o Airport check-in o City check-in o Tele check-in

ii. How long did you have to wait in the queue before check-in

o 15 mins

iii. Time taken to check-in at the counter

o 10 minsiv. Staff greeting, helpfulness, and warmth o o o o

v. Staff grooming o o o o

vi. Staff efficiency o o o o

vii. How do you rate the check-in progress o o o o

c. Boarding procedures

i. Clarity of boarding announcements o o o o

ii. Boarding process

At boarding hall o o o o

At the aircraft o o o o

iii. Friendliness and warmth of staff o o o o

iv. If your flight was delayed, how well was it handled by our airport staff?
http://www.jetairways.com/http://www.jetairways.com/http://www.jetairways.com/http://www.jetairways.com/


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Department ..

ii. Name .

Department ...

iii. Name .

Department

iv. Name ..

Department

We thank you for the time that you have invested in answering our Service tracker. Your valuable opinion and constant support is our inspiration

EXHIBIT 3.1

Sample Servqual questionnaire

The Survey The questionnaire below is in two sections. The first section asks you to rank all banks according to your

expectations i.e. what you expect all banks to provide. The second section asks you to rank the bank you chose

for the survey according to your experiences and perceptions.

Expectations This section of the survey deals with your opinions of banks. Please show the extent to which you think banks

should posses the following features. What we are interested in here is a number that best shows you

expectations about institutions offering banking services.

You should rank each statement as follows:

Strongly 1 2 3 4 5 6 7 Strongly

Disagree Agree

Statement Score

1. Excellent banking companies will have modern looking equipment.

2. The physical facilities at excellent banks will be visually appealing.

3. Employees at excellent banks will be neat in their appearance.

4. Materials associated with the service (pamphlets or statements) will be visually appealing at an

excellent bank.


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Statement Score

5. When excellent banks promise to do something by a certain time, they do.

6. When a customer has a problem, excellent banks will show a sincere interest in solving it.

7. Excellent banks will perform the service right the first time.

8. Excellent banks will provide the service at the time they promise to do so.

9. Excellent banks will insist on error free records.

10. Employees of excellent banks will tell customers exactly when services will be performed.

11. Employees of excellent banks will give prompt service to customers.

12. Employees of excellent banks will always be willing to help customers.

13. Employees of excellent banks will never be too busy to respond to customers' requests.

14. The behaviour of employees in excellent banks will instil confidence in customers

15. Customers of excellent banks will feel safe in transactions.

16. Employees of excellent banks will be consistently courteous with customers.

17. Employees of excellent banks will have the knowledge to answer customers' questions.

18. Excellent banks will give customers individual attention.

19. Excellent banks will have operating hours convenient to all their customers.

20. Excellent banks will have employees who give customers personal service.

21. Excellent banks will have their customers' best interest at heart.

22. The employees of excellent banks will understand the specific needs of their customers.


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Perceptions The following statements relate to your feelings about the particular bank you have chosen. Please show the

extent to which you believe this bank has the feature described in the statement. Here, we are interested in a

number from 1 to 7 that shows your perceptions about the bank.

You should rank each statement as follows:

Strongly 1 2 3 4 5 6 7 Strongly

Disagree Agree

Statement Score

1. The bank has modern looking equipment.

2. The bank's physical features are visually appealing.

3. The bank's reception desk employees are neat appearing.

4. Materials associated with the service (such as pamphlets or statements) are visually appealing at

the bank.

5. When the bank promises to do something by a certain time, it does so.

6. When you have a problem, the bank shows a sincere interest in solving it.

7. The bank performs the service right the first time.

8. The bank provides its service at the time it promises to do so.

9. The bank insists on error free records.

10. Employees in the bank tell you exactly when the services will be performed.

11. Employees in the bank give you prompt service.

12. Employees in the bank are always willing to help you.

13. Employees in the bank are never too busy to respond to y our request.

14. The behaviour of employees in the bank instils confidence in you.

15. You feel safe in your transactions with the bank.


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Statement Score

16. Employees in the bank are consistently courteous with you.

17. Employees in the bank have the knowledge to answer your questions.

18. The bank gives you individual attention.

19. The bank has operating hours convenient to all its customers.

20. The bank has employees who give you personal attention.

21. The bank has your best interests at heart.

22. The employees of the bank understand your specific needs.


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REFERENCES

Naresh goyal and jet airways case

Francis Buttle, 1996, "SERVQUAL: review, critique, research agenda," European Journal of Marketing, Vol.30, I ssue

1, pp. 831

Humphrey, Albert (December 2005)."SWOT Analysis for Management Consulting".SRI Alumni Newsletter(SRI

International).

Porter, Michael E. (1980).Competitive Strategy.Free Press.ISBN0-684-84148-7

The Five Competitive Forces That Shape Strategy - Article - Harvard Business School. 2014. The Five Competitive

Forces That Shape Strategy - Article - Harvard Business School. [ONLINE] Available at:

http://www.hbs.edu/faculty/Pages/item.aspx?num=34522. [Accessed 26 November 2014].

The Ansoff Matrix. 2014. THE ANSOFF MATRIX. [ONLINE] Available

at:http://www.spencertom.com/2013/10/09/ansoff-matrix/#.U60YwZSSz3Q. [Accessed 26 November 2014].
http://www.sri.com/sites/default/files/brochures/dec-05.pdfhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/Competitive_Strategyhttp://en.wikipedia.org/wiki/Competitive_Strategyhttp://en.wikipedia.org/wiki/Competitive_Strategyhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/0-684-84148-7http://en.wikipedia.org/wiki/Special:BookSources/0-684-84148-7http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Competitive_Strategyhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://en.wikipedia.org/wiki/SRI_Internationalhttp://www.sri.com/sites/default/files/brochures/dec-05.pdf

Jet Airways Naresh Goyal Case Study Analysis

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