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Jet Airways was integrated as an air taxi operator on 1 April 1992. It started commercial airline operations on 5 May 1993 with a fleet of 4 Boeing 737-300 aircraft, with 24 daily fight serving 12 destinations. In 1991, the late P.V. Narasimba Rao, (Prime Minister of India) in that time, introduced an "open skies" policy as part of India's economic liberalisation. This opened doors for many privately owned "open taxi" operators to start schedule services.
Naresh Goyal, who already owned Jetair (Private) Limited who provide sales and marketing for foreign airlines in India took advantage of this opportunity by setting up Jet Airways as a full service schedule airline and hence it gave a good competition to the state owned Indian Airlines. Jet airways within a short span of 14 years established its position as a market leader. The airline has the distinction of being repeatedly adjudged India's 'Best Domestic Airline' and also he won several national and international awards.
Jet Airways nearly fly to 63 destinations which includes domestic as well as international. International destinations include London's Heathrow Airport, Colombo, Singapore, Kuala Lumpur, Bangkok and many more. Jet Airways was the first Indian private airline to fly in India and international destinations. Jet Airways first start its international operation in March 2004 between Chennai and Colombo. Subsequently, a second route was linking Mumbai with Colombo and Delhi to Kathmandu.
Jet Airways (India) Private Limited is India's leading private airline. It boasts a market share of about 18 percent. Jet operates relatively young fleet of Boeing 737 jets and ATR 72 turboprops. It nearly carries seven million passengers a year. Its reputation for punctuality and outstanding service attracts a large proportion of business travellers. As mention above, the founder and chairman of Jet Airways is Naresh Goyal, an Indian expatriate living in London. Jet was balanced to profit from an expected extension of flying rights throughout Asia. An initial public offering of 25 % of shares, discussed since 1995, was also in the works. Jet had approximately borrowed nearly $800 million to finance new aircrafts.
The Jet Airways network round the world is nicely shown in the figure below.
Objectives of this project:
To examine and evaluate current position of Jet Airways in market. To figure out the key weakness of the current marketing by Jet Airways. To recommend suggestion that can help in improving the standard of services offered by Jet Airways which help in gaming competitive benefit in the consumer markets.
This module will have introduced you to some of the current thinking and practises observed in organisations operating in the more dynamic business environments. Not only should you be able to analyse those environments but also evaluate how an organisation is adapting to the business environment in terms of its resources management. The purpose of this assignment is to evaluate how well you can apply such an analysis and evaluation to an organisation, and, through a critical examination of the factors arising from these activities, suggest the way forward for that organisation.
Market Planning Process:
PEST Analysis: Jet Airways
A PEST analysis is an analysis of external environment that affects all the organisations. Such types of external factors generally are beyond the organisation's control and sometimes present as a threats. Let us look at the PEST analysis of the Jet Airways.
Due to unstable political environment of India, its affects on the mind of the several international travellers.
The recent riots in Gujarat also affect badly the mind of several international travellers and government also fails to control the situation which led to increase in an insecurity of the political ground.
The Indian government is highly corrupted which makes company very difficult to get important licence and permit required.
There is always a political tension going between India and Pakistan which always create a problem with no fly zone of Indian planes over Pakistan which increase the cost of flying and loses the revenue.
Business cycles have a wide reaching impact on the airline industry. During recession, airline industry is considered as the luxury and also there is a major cut in air travel because of which companies were force to reduce the prices.
After the incident of September 11, the world economy plunged into global recession due to depressed sentiment of the customers.
This loss of income that airlines are facing is affecting the companies badly as they have to pay high operational cost and higher insurance cost.
These cost more increase after the WTC bombing which force the company to lay off staff and this also affecting and the recession.
The changing travel habit and per capita income of the country people play a very wide impact on the airline industry. To create business success the airlines industry need to focus on their mostly low income clients and serve them with wider range of options.
The airline industries need to focus on destinations which are more in demand and they must be careful of the food they are offering, because India is a mix of different religion and as a company, one have to make sure that it is take into consideration.
Sound pollution and plane hi-jacking.
The use of technology has increased over the period of time and therefore more and more peoples are using internet to book their tickets.
Therefore companies are coming up with different strategies to make sure that they can take advantage of their revenue.
USTDA (US Trade and Development Association) is also helping the Airport authority of India to do a possibility study for a long term improvement of aviation seats a week before departure.
The Indian government has also passed a proposal to improve the standard of airports in all the major cities which will make them world class. This will help them to attract more investment in the industry and improve overall infrastructure.
Modernization of aircrafts.
Modern technology like C AT3 and ILS.
SWOT Analysis: Jet Airways
The strengths, weaknesses, opportunities or threats internal to a company represent the strategic environment known as a SWOT analysis (QuickMBA, 2004).
Jet Airways is well known as "Market Driver."
It has an experience of more than 14 years.
It has the largest fleet size.
It was the first private Indian airline in international operations.
A phenomenal and well developed network of the airline around the world.
Excellent lobbying skills and ability to leverage connections within government.
A massive pool of loyal customers and ability to survive downturns earlier.
Financing raised on strength of own balance sheet.
Jet Airways perceived drop in service standard when pitted against Kingfisher Airways.
Use of old fleet with average age around 10 years.
Struggling with carcass of Air Sahara.
They also have poor people management skills.
Scope for improvement in in-flight services.
Inability to raise money for the last two years.
Weak brand promotions.
Untapped air cargo market.
Quick Checks Kiosks
Scope in international service and tourism
Catering for different customers.
The use of new information technologies.
Jet Airways have strong competitors in both domestic as well as international market.
A biggest threat is of terrorism.
Fuel price hike.
Overseas market competition and unstable political conditions in India.
Threat from new entries.
The health of Airlines industry highly depends on the global economy. This economy directly affects air travels by business and consumer passengers. As many are fixed, the profitability of individual companies is determined by efficient operations and on favourable fuel and labor costs. Similar airlines compete by serving local or regional routes. The main competitors of Jet Airways in the Indian market are stated as below.
Kingfisher Airlines Limited.
Air India Limited.
Low Cost Airlines (LCA).
Spice Jet Airways.
Go Air Airways.
Jet Lite Airways.
The following graph shows the current situation which has change now due to its poor standards and the lack of trained staff.
Ref: Annual Report Airport authority of India 2009
Most of the Airlines industries use a very traditional segmentation strategy, which are dividing passengers into business travellers and economy travellers (mostly leisure travellers). The common strategy is to grip as much as profit as possible from the business class passengers who are attracted by superior services. In India, travelling by plane is considered as luxury. From the above graph we can see that 15% of the Indian population use this mode of travelling and the basic reason behind it is cost. So the peoples who mainly use Airplanes are basically a business man or government employee which contributes nearly 50% of the business. The remaining 35% are international travellers who visit India for less time and have to travel few major cities of India so basically they are using Jet Airways (JA) as a mode of communication.
Jet Airways being the first India's private international airline have more places in route as compared to any other carrier in India
The segmentation of Jet Airways is general like any other airline, these are stated as follows:
The development of country over last 10-15 years is booming as more and more companies are coming up in the market. Due to this reason the market change a lot and there is a huge amount of decrease in price of travelling on air so there is a tremendous increase in the target market. The major market that JA is looking is stated as follow:
Student Discounts (Student get up to 25% discount on JA abroad scheme)
As the company is trying to rebuilt its lost image in the mind of the consumer it is trying to reposition itself from HQ-HP to MQ-MP
So the company is trying to reposition itself and for doing so they are planning to high new staff and improve the standard of service in the organization. The government of india is trying to reduce the governmental nature of the organization by creating a separate board for AI this will help the company in taking fast decision and help the company to improve its image in the market
We have done questionnaire from the customers using Jet Airways and try to find out the problems they are facing.
Problems as indentifies with the customers comment card:
There are severe delays in the flight timings with no information given to the guest so they have to wait at airports for hours.
Aircrafts are old and not at all comfortable.
Baggage went missing.
The onboard service is not up to the standard.
The staffs are insufficient, not smiling and rude.
No Customer Care.
No Value for money.
The Airline Industry usually provides two main types of services:
The In-Flight service is all about hospitality. It also includes entertainment facilities such as movies, music and games. It is all about making guest journey enjoyable. For making guest journey enjoyable JA must need to have a well trained and polite staff because there is a complaints against staff for rude behaviour to guests.
On the other hand On-Ground service includes guest baggage handling and providing a convenient place for customer to sit in the flight. It also includes bus services for connecting JA guest. There is one serious problem with JA as we came to know from the primary survey, that lot of guests have problems with their baggage went missing or broken and hence it need to be fix.
Price is playing a vital role as the market is getting more and more competitive with the introduction of new carriers in the market. Therefore price plays an important role in the mind of customers while making a purchase.
In premium pricing, the airline decides to set the price which is higher than the price in the market. This is normally done to generate an image of brand in the mind of customer that the services which are offering are of high quality. This type of pricing is commonly done to attack more corporate client of the companies whose who are generally first class travellers.
Value for Money Pricing:
Value for money is a pricing strategy in which company charges the average price for its services and tries to convey message that they care for the customers and want to give them value for money. This will help the company to achieve a good profit in the market.
Cheap Value Pricing:
The main reason company goes into this pricing is to get some attention from its clients and to capture its lost market.
In this scheme, people are given very cheapest rates only if they book tickets at least before the specified time period.
For creating company success, it is very important that it must be easily available to its clients and JA is the first Indian private international airline and hence it set up a proper distribution channel and with the help of that we can target the market easily.
Jet Airways also provide online operations now a day to their clients so they can also book a ticket online and this makes things even easier. Through online shopping they can prove easily that there prices are more efficient in the market.
Promotion mix is something which is very important for an airline industry in India because the target audience is those for whom airlines are not the first priority. So JA has to come up with various promotions and different marketing schemes such as:
Special discount rate for students and elderly customers.
Take your family for a holiday in which just buy two tickets kids go free.
Also have an option for customers that they can buy ticket now and pay on monthly basis.
Buy 1 ticket and get 1 ticket free.
Extra baggage allowance (up to 46kg).
Jet Privilege offers.
Book before 45 days and get up to half price ticket.
Air miles: This is a loyalty card that we issue to our guest so that if they use us more often then they will get a special discount while booking the flight with us.
People Mix is one thing we need to consider seriously because at present we have a very bad situation as far as staffs is concern in our organisation. As we know that people are the most important asset for any hospitality organisation and without them it is unable to satisfy the demands of the customers. So we need to have a permanent team of well trained professional staffs who can take decisions.
Internal Promotions of Staff: The advantage of internal recruiting includes improved employee motivation and morale and ready access to a skilled pool of applicants and also they are familiar with the property. Hence it provides you with an opportunity to reward good employees with new job responsibilities
Standard Operating Procedure: We must assure that every department have standard operation procedure to evaluate the performance of staffs which are working in their own department and so we can reward the staff accordingly. This will help in motivating the staff and also help us in serving our guests better.
Reward System: This is use to motivate the staff to perform better and also can create a competitive environment.
There are some things which are in the hand of the company and others which are not in the hand of the company for example if the guest is buying the product from us directly they can make sure that the whole process goes right but if the guest is buying the ticket from the travel agent that it is not in our hand so to improve the service we make sure we pay the right commission to our travel agent so that they promote our things and make the things easy for our clients and help us in gaining the market
Physical Evidence is the place in which the service is delivered. JA makes sure that each and every aircraft of ours is a world class standard and high class food and services are available to our clients. This helps in building a good image of the company in the mind of the clients and also helps us in promoting our brand in the market.
Human Resource Management at Jet Airways (JA):
JA is a public limited company and like most of the other companies this company also faces a lot of officialdom in the organisation. In October 2008, JA decided to lay off more than 1900 employees to the "streamline" its operations. The cost cutting was the second phase of its downsizing operations.
The first phase, which took place a day earlier, saw the airline showing the door to 850 cabin crew members. The second phase of downsizing included employees from all operations such as cabin crew, pilots, ground staff and airport services staff, and employees from management departments. The sudden decision not only took the employees by surprise but also caused alarm in the Indian aviation sector. The communication breakdown between employees and senior management meant that employees were forced to communicate through trade unions in an inefficient, time consuming, politically charged manner.
A month later, in November 2008, Jet announced that it would consider a serious salary cuts for its staff to handle the aviation crisis. While many Human Resource analysts were surprised by the turn of the events that had led to the reinstatement of sacked employees. They opinion that JA had been forced to take drastic decisions such as laying off employees or initiating pay cuts because of the turbulent phase through which the aviation industry was passing.
HR Management, Issues and Decision Making at JA:
According to the company,