Case Study | Jet Airways: Shutdown for real, but likely revival?

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The Jet Airways case study is so popular now that it is often considered one of the biggest business failures to have happened in India. Founder Naresh Goyal is under investigation by the Enforcement Directorate (ED).

According to reports, almost 4000 employees are still dependant on the airlines for a regular source of income while many ex-employees remain jobless after the shutdown of its operations in April 2019.

What happened?

First of all, the merger between Jet Airways and Sahara Airlines was a miscalculation on Jet’s part. Sahara was acquired for $500 million, which was way costlier to what the airline was. At the time, the brand Sahara was stamped on every Indian’s mind with its name on every Indian’s tongue. When this was the case, Jet Airways renamed Sahara Airways to JetLite. This rebranding cost Jet all more loss in its customer base – the Sahara brand image could not resonate with JetLite.

Secondly, every company out there relies on the capabilities of its management board; there is no thinking twice to this school of thought.

However, Naresh Goyal, Jet’s founder, decided to turn into a one-man army and did not hire a reliable management committee to aid him in running the show. Internally, there was often a talk about his poor financial awareness. He depended on a single management team for managing all operations related to Jet. It is no rocket science to comprehend that skilled teams are necessary to operate various departments.

Jet was spreading itself too thin. Jet was offering passengers full-service airlines, where the passengers can opt to choose economy, business class, premium economy, and first-class. In India, operating as a full-service airline is a difficult task.

Catering to the lower sections, the middle-class, and the wealthy of the country takes operational excellence and strategy of the highest order. That is one reason why many companies concentrate on the middle-class section and suppress the prices as low as possible. 

Talking about prices, the airline was never good with money. It kept beckoning debt and spent more than its revenue, and employees were paid lavishly, in comparison, to the industry measures. The airline compromised when it came to finances just for providing comfort and luxury.

Revival?

As per official reports but Jet Airways, if all goes well according to the resolution plan and the consortium receives the National Company Law Tribunal (NCLT) and Regulatory approvals, the airline would resume its operations by the summer of 2021.

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