An Assignment On “Practical Application With Re ference to Production and Operations Management ”
Case Study Of
“Naresh Goyal and Jet Airways”
Faculty Guide:
Submitted By:
Prof. Kalpesh Ganotra
Dimpal Parmar Enrolment No-117920592046 Roll No : 35 Milind Joshi Enrolment No-117920592047 Roll No : 36 Group No. 18
Section: F
M.B.A – I, SEMESTER - II
Dr. J. K. Patel Institute of Management – Vadodara Parul Group of Institutes Affiliated to Gujarat Technological University
Naresh Goyal and Jet Airways Naresh Goyal was born in 1949 in Patiala, Punjab. His father, a jewellery dealer, died when he was 10 years old. Naresh used to walk miles to go to his school as he couldn’t afford a bicycle. His mother struggled to pay his fees. However with the help from her family, Naresh was able to get basic education. Naresh earned a Bachelors of Commerce in 1967. Many of his friends went to London for higher education and he had a desire to do the same. Since he did not have the money to pursue education abroad, he decided t o work with his mother’s uncle. His mother’s uncle used to run some cinema theatres in India and had an agency with Lebanese International Airline. Naresh heeded to his mother’s advice and j oined as a cashier in her uncle’s Delhi based agency, Continental travels. For three years he slept in the office and earned about Rs 2000 a month. Later, Naresh joined as a Sales Agent for Lebanese International Airlines. Subsequently, he was appointed as the Public Relations Manager of Iraqi Airways in 1969. From 1971 to 1974 he was the Regional Manager for Royal Jordanian Airlines. During this period, he also worked with the Indian offices of Middle Eastern Airlines, where he gained experience in various areas, such as, ticketing, reservations, and sales. Naresh began to build contacts and, in 1974, with Rs 40000 from his mother, he floated his own Jetair Private Ltd (then known as Jetair Transportation Private Ltd) to provide sales and marketing representation to airlines, such as, Air France, Austrian Airlines, and Cathay Pacific in Indian. Shortly thereafter in 1975, he was appointed as the Regional Manager of Phillipine Airline where he handled the airline’s commercial operations in India. Naresh’s wife, Anita, used to work for the Oberoi hotels in India. In 1979, she joined the marketing department of Jetair. This is when Naresh met her for first time. Over the years, she grew from a Market Analyst to a General Manager to a Vice President in Jet Airways. She has been looking after pricing, scheduling, network, revenue management, and sales and marketing.
The Indian government nationalized the airline industry in 1953, hence, Indian Airlines (now Indian) and Air India were the only two airlines in the market. The market opened after the liberalization in 1991. The government allowed, what it described as, air taxis to operate-private carriers could fly but they could not print time tables. Naresh spotted an opportunity. In 1993, with the backing of Gulf Air and Kuwait Airways, he leased four Boeing 737 aircrafts and started Jet Airways. Jet Airways started commercial operations on 5 May 1993. Naresh hired talent from airlines he admired. He overcame the constraints of not being able to publish a schedule with inventive zeal. Back in 1993, when other startups were inducting Boeing 737-200 aircrafts, Naresh bought new generation Boeing 737-400s. he understood the value of quality and made sure that he hired the best professional talent in the international market. Jet Airways was granted scheduled airlines status on 14 January 1995. It became a deemed public company on 1 July 1996. On 19 January 2001, it was reconverted into a private company. Jet Airways became a public company on 28 December 2004. The government of India came with a civil aviation policy on 29 December 2004. According to the policy, private airlines could fly overseas anywhere in the world except Gulf for three years. Jet Airways started its operations to Singapore on 18 April 2005 and to London on 23 May 2005 (between Mumbai-London Heathrow), shortly followed by its Delhi-London-Delhi service. It also started flights to Kuala Lumpur on 18 May 2005. In its first year of operation, Jet carried 730000 passengers. In 2005, the company, which now had a fleet of 55 aircraft, carried 10 million people and generated revenues of US $1.4 billion. Today, Jet Airways has evolved into India’s largest private domestic airline. Naresh Goyal has an elegant house in a posh locality across Regent’s Park in London. The Sunday Times (London) ranked him in 2006 as the
sixth richest Asian living in Britan, estimating his wealth at £780 million. He has lived in London since 1991. Being an NRI based in London only adds to his enigma. He is also said to be a nervous flier who prays before take-off. In his spare time, Naresh is known to be glued to BOllywood films. No wonde that film personalities, such as, Shatrughan Sinha and Javed Akhtar have served as independent Directors on the Board of Jet Airways. Naresh considers Reliance Industries founder Dhirubhai Ambani as his role model. In the airline industry, he is a great admirer of Lord Marshall, the former Chairman of British Airways, and J.Y. Pillay, the former Chairman of Singapore Airlines. Since its inception, Jet Airways had a clear strategy of focusing upon the business traveler in India. It offers several services directed towards the convenience of the business traveler, including telephone check in facilities, priority baggage service, high frequency services on major routes. Same- day return flights on major routes at convenient timings, point to point connections, providing flight information on cellular phones of customers, its customer loyalty programm , e-ticketing, business class section on almost all flights, and airport lounges for business class passengers at most airports. These facilities and the focus on providing high-quality reliable service have contributed to it becoming the preferred airline for business travelers in India. Jet currently provides regular scheduled services to 42 destinations in India and operates 1924 weekly flights. It uses five hubs —Mumbai, Delhi, Chennai, Kolkata, and Bangalore. It maintains engineering and maintenance facilities at each of these hubs. The major hub of its operations is Mumbai followed by Delhi, Chennai, Kolkata, and Bangalore. The use of five hubs helps it to originate flights from these cities. One of the key elements of the company’s business strategy is to maintain high daily aircraft utilization, which represents the average number of block hours operated per day per aircraft for the total aircraft fleet. High daily aircraft utilization allows it to enhance the efficiency of its operations and generate more revenue from its aircraft and is achieved in part by reducing turnaround time at airports so that it can fly more hours on average in a day. Aircraft utilization is reduced by delays resulting from the following factors, most of which are beyond the control of any airline:
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. A major cause of concern for Jet is the expansion of its business to include new destinations and more frequent flights on existing routes. This could increase the risk of delays as expansion increases its exposure to congested airports, longer flight durations, and air traffic congestion. Delay could reduce its daily aircraft utilization and, in turn, limit its ability to achieve and maintain profitability as well as damage its reputation. Further, high aircraft utilization increase the risk that once an aircraft falls behind schedule during the day, it could remain behind schedule during the remainder of that day, which could result in disruption in operating performance leading to passenger dissatisfaction. Passengers may get dissatisfied due to delayed or cancelled flights, or missed connecting flights.
Utilizing aircraft efficiently Various parameters and data relating to the utilization of aircraft efficiency at Jet Airways
As of and for the year ended March 31
Passengers carried (millions) ASKMs(1) (millions) RPKMs(2)(millions) Passenger Load factor(3)(%) Number of aircraft at period end Average number of aircraft during period Number of domestic stations served (+ international stations served) Aircraft utilization(4)(hours/day per aircraft) Average stage lenth (kilometers)(5)
2002 2003 2004 5.82 6.41 6.91 7,780 8,496 9,162 4,777 5,291 5,852 61.4% 62.3% 63.9% 38.0 41.0 41.0 34.9 38.9 40.8 44 9.66 792
40 41(+1) 9.41 9.46 805 816
As of and for the six months ended September 30 2003 2004 3.27 3.78 4,542 4,796 2,771 3,245 61.0% 67.7% 39.0 41.0 40.6 41.0 40 9.48 821
42(+2) 9.84 818
1) Available seat kilometers represents the average number of block hours operated per day per aircraft for the total aircraft fleet. 2) Revenue passenger kilometers the number of kilometers flown by revenue passengers. 3) Revenue passenger kilometers expressed as a percentage of available seat kilometers. 4) The average number of block hours operated per day per aircraft for the total aircraft fleet. 5) The average number of kilometers flown per flight. Source: Jet Airways 2005 In fiscal 2004 and the six months ended 30 September 2004, Jet Airways aircraft operated an average of 9.46 and 9.84 hours per day, respectively (see Table 2.3). By achieving high utilization, it is able to optimize crew movement, and spread its fixed costs to over a greater number of flights and available seat kilometers. It achieves high aircraft utilization because: newer aircraft can be scheduled to fly more hours per day as they are more reliable and require less maintenance than older aircraft; and its staff is able to achieve quick, efficient, airport turnarounds, which enable it to increase the number of daily flights per aircraft.
Pricing and Revenue Management
Jet Airways offers several fare options as given below:
Economy and club premier fares; Discounted fares for senior citizens and defence personnel; Advance passenger excursion, or APEX fares. Using its yield management system, Jet Airways reserves a fraction of seats to be offered on discounts for advance booking (30 days, 21 days, and 15 days before the departure date of the flight); ‘One fare’ scheme that allows passengers to buy four or six coupons for a fixed fare and use them on any sector; ‘Night saver’ fares are offered for night flights, operated by Jet on certain routes. Up to 80 percent discount is offered in five slabs for these flights due to their odd timings; US dollar fares and ‘visit India’ fares for overseas travellers. ‘Check fares’ are offered to the customers on certain flights with no requirement for advance booking. These are different from APEX as there is no need for advance booking with these
check fares, which are 30-40 percent lower than the normal economy class fares. These fares are offered close to the departure date of the flight to ensure minimum number of unsold (empty) seats in a flight. Most of these flights happen to be afternoon flights with less passenger traffic. This is another benefit of the yield management system implemented by Jet due to which the revenues started showing an upward trend. Its APEX fares are subject to certain advance purchase and cancellation conditions. Yield management and pricing form the backbone of its revenue generation strategy and are strongly linked to its route and schedule planning, and sales and distribution activities. Yield management involves the use of historical data and statistical forecasting models in order to gain knowledge about its markets and maximize the airline’s opera ting revenues. Its yield management practices enables it to respond to and anticipate market changes. The number of seats it offers at each fare level in each market results from a continual process of analysis and forecasting. Past booking history, seasonality, the effects of competition, and current booking trends are used to forecast demand. Current fares and knowledge of upcoming events at destinations that will affect traffic volumes are included in its forecasting model to arrive at optimal seat allocations for its fares on specific routes. Jet uses a combination of approaches, taking into account yields and flight load factors, depending on the characteristics of the best possible revenue per available seat kilometer, balancing the average fare charged against the corresponding effect on their load factors. For this purpose, Jet uses SABRE, a state of-the-art yield management system. Jet Airways derives its revenues primarily from transportation of passengers on its aircrafts. In addition, it also earns revenues from carriage of cargo, which consists of consists of courier, postal mail, and commercial cargo. Passenger revenues are dependent on ‘passenger load factors’ and fare levels. These are measured by the following
Capacity measured in terms of available seat kilometers or ASKMs. It is defined as the aircraft seating capacity multiplied by the number of kilometers the seats are flown; Utilization measured in terms of revenue passenger kilometers (RPKMs). It is defined as the number of kilometers flown by revenue passengers; Passenger load factor, or the percentage of its capacity that is actually used by revenue customers. It is defined as revenue passenger kilometers expressed as a percentage of available seat kilometers. Net passenger revenues, representing passenger revenues less commissions paid to GSAs and travel agents; Yield, derived by dividing net passenger revenues by revenue passenger kilometers; and Breakeven load factor. It is defined as the passenger load factor that will result in net passenger revenues being equal to total expenses less cargo and non-operating revenues.
Parameters and data relating to the passenger revenues of Jet Airways Year ended March 31
Capacity ASKMS (millions) Utilization RPKMS (millions) Passenger Load Factor(%) No. of passengers (Millions) Gross average revenue per Passenger (Rs.) Growth in average revenue Per passenger (%) Yield (Rs.) Growth in yield(%)
2002 7,780 4,777 61.4% 5.82 4,057 4.36 -
2003 8,496 5,291 62.3% 6.41 4,173 2.8% 4.52 3.7%
2004 9,162 5,852 63.9% 6.91 4,655 11.5% 5.01 10.8%
Six months ended September 30 2003 2004 4,542 4,796 2,771 3,245 61.0% 67.7% 3.27 3.78 4,650 4,785 -
2.9%
50.2 -
5.05 0.6%
Service Quality The branding tagline of Jet Airways is ‘The joy of flying’ and it reflects in the quality of services it provides to its passengers. Jet Airways is one of the few airlines in the world to receive the ISO 9001 certification for its in-flight services.
Jet Airways provided on demand audio and video entertainment for the first time ever in the domestic sector. The passengers can select, play, pause, forward, or rewind their favourite programme. It provides over 100 hours of award-winning shows from Hollywood and Bollywood; 8 audio channels and over 70 audio CDs; the largest video screen in the domestic sector with touch screen technology; and an innovative moving airline route map. Jet Airways is renowned for its sumptuous and delicious meals served on every flight even during the flights not covering the meal timings. Jet Airways has developed systems to track various aspects of its services. On –time performance and the reasons for delays are analysed every day. It receives and analyses over 57,000 service tracker questionnaires every month, where passengers are asked to evaluate all its services on a fourpoint scale. It undertakes quality audios of in-flight and ground services by a dedicated services and product quality team. It endeavours to promptly respond to any customer complaint. The airline believes in meeting and exceeding its customer service expectations. It is evident from the feedback received by the airline during the six months ended 30 September 2004:
It was rated either ‘good’ or ‘excellent’ for overall services by approximately 95 percent of its passengers who completed its questionnaires. Rating for in-flight services and efficiency were 97 percent and 95 percent, respectively.
JET AIRWAYS SERVICE TRACKER We look up to you, to help us serve you better
JET AIRWYS 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. 9W……………………………From……………………………….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 o ii. 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 <5 mins o 5-10 mins o 6-10 mins o >15 mins iii. Time taken to check-in at the counter o <2 mins o 2-5 mins o 6-10 mins o >10 mins iv. 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? o o o o d. Overall Rating for Airport Services o o o o 5. In-flight Services a. Service by Cabin Crew i. Friendly welcome at the time of boarding o o o o ii. Assistance on board o o o o iii. Courteous and professional service o o o o iv. Responsiveness to your needs o o o o v. Grooming o o o o vi. Interaction o o o o vii. Overall rating for cabin crew o o o o b. In-flight reading material i. JetWings o o o o ii. Selection of newpaper(s) o o o o c. JetKids giveaway i. Quality o o o o ii. Content o o o o d. Announcements Cockpit Crew i. Clarity o o o o ii. Diction and Fluency o o o o Cabin Crew i. Clarity o o o o ii. Diction and Fluency o o o o e. Others i. Cleanliness of the cabin o o o o ii. Cleanliness of the washroom o o o o iii. Temperature in the cabin o o o o
Before take-off o Just right o Too cold o Too hot After take-off O Just Right o Too cold o Too hot
6. Food a. Type of meal enjoyed in this flight o Vegetarian o Non-vegetarian o Others b. Meal appropriateness (for time of flight) o o o o c. Meal presentation (visual appeal) o o o o d. Meal quality(taste) o o o o e. Meal quantity o Just right o Too little o Too much f. Overall rating for food o o o o 7. Please rate your total experience with Jet Airways on this trip o o o o 8. Based on your experience on today’s flight i. Would you travel with Jet Airways for your next trip? o Definitely o Probably o Definitely not ii. Would you recommend Jet Airways to your friends? iii. o Definitely o Probably o definitely not 9. Your experience on arrival, of your previous flight on Jet Airways Date ……………………….. Flight No. 9W………………………..From………………………..To…………………………….. a. Waiting time for Tarmac Coach (if applicable) o None o 2-5 mins o 6-10 mins o >10 mins b. Baggage arrival o 2-5 mins o 6-10 mins o 11-15 mins o >15 mins c. Presence of staff at conveyer belt o Yes o No d. Handling of baggage related issues (if any) Staff efficiency o o o o Courtesy and helpfulness o o o o Responsiveness to your query o o o o e. Overall rating for baggage handling o o o o Staff Recognition Kindly help us recognize those members of our staff who have impressed you with their outstanding service. i. ii. iii. iv.
Name ……………………………………………… Department …………………………………….. Name ………………………………………………. Department ……………………………………... Name ………………………………………………. Department ……………………………………… Name ……………………………………………….. Department ………………………………………
WE THANK YOU FOR THE TIME THAT YOU HAVE I NVESTED IN ANSWERING OUR SERVICE TRACKER. YOUR VALUABLE OPINION AND CONSTANT SUPPORT IS OUR INSPIRATION. Jet Airways has received numerous awards that recognize the quality of its service:
Citibank Diners Club Blue Moon Award for Service Excellence in 1995; H&FS Best Domestic Airline of the year Award for Excellence in Hospitality for the years 1996, 1998, 1999, and 2001; Air Transport World Market Development Award for the year 2000; Financial Express Business Traveler Award (Domestic Airline Category) for Business Class, Economy Class, and Best Service (Airport and In-Flight) in 2003 and 2004; Best Domestic Airline of Asia By the Asian readers of Travel Trade Gazette for the years 2003 and 2004; and The Business-world award for the most respected company in the travel and hospitality sector in 2003. Jet Airways has also been ranked by Business world magazine, in 2004, as one of the ten most respected companies in India. As part of its continued emphasis on the quality of its service, in August 2004, the company launched a new programme known as Seamless Customer care, which involves the participation of employees at the 42 domestic airports it connects. The objective of this programme is to focus on customer care and enhance the overall passenger experience by seeking input from its employees at the airports it connects. A committee of the head of each operational department chaired by its Chief Operating officer oversees this programme. The ride has not been entirely smooth for Jet Airways. Its market share peaked at 46 percent nut has fallen to 35 percent since the launch of aggressive, Indigo, GoAir, etc. jet is still growing, but has failed to keep pace with the domestic market, which is growing by up to 25 percent a year. However, the acquisition of Air Sahara by Jet Airways on 13 April 2007 for 14.5 billion—40 percent less than the 22 billion original deal in January 2006—after a long-drawn arbitration 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 percent of the market share. 1. The market share of Jet Airways is falling due ti intense competition. Should Jet continue its focus upon business customers under the current competitive scenario? 2. The service tracker instrument devised by Jet Airways for tracking its service quality is a better instrument than the SERVQUAL instrument. Do you agree with this statement? If yes, why? 3. The current yield management system used by Jet airways can be improvised further by prompt communication with potential customers and ensuring full occupancy in all flights. What is your opinion?
SUMMARY The case, gives an overview of Jet Airways’ success in the domestic airlines Industry. The case talks about the performance of Jet Airways since its formation in 1992. Over the years Jet Airways improved its market share significantly from 6.6% in 1993-94 to 42% in 2000-01.
The Indian government nationalized the airline industry in 1953. The market opened after the liberalization in 1991.in 1993, with the backing of Gulf Air and Kuwait Airways, he leased four Boeing 737 aircrafts and started Jet Airways on commercial operations on 5 May 1993 with leased aircraft would have cost Jet Airways around $40-$50 where a monthly lease was as low as $0.4 million. Jet Airways also started its operations with the new Boeing 737-400s and not the older Boeing 737-200s aircrafts. Jet Airways was granted scheduled airline status on 14 January 1995. It became a deemed public company on 1 July 1996. In first year of operation, Jet carried 730,000 passengers. In 2005, the company, which now had a fleet of 55 aircraft, carried 10 million people and generated revenues of US $1.4 billion. The Sunday times (London) ranked him in 2006 as the sixth richest Asian living in Britain, estimating his wealth at £780 million. Jet currently provides regular scheduled services to 42 destinations in India and operates 1,924 weekly flights. It uses five hubs—Mumbai, Delhi, Chennai, Kolkata, and Bangalore. One of the key elements of the company’s business strategy is to maintain high daily aircraft utilization, which represents the average number of block hours operated per day per aircraft for total aircraft fleet. High daily aircraft utilization allows it to enhance the efficiency of its operations and generate more revenue from its aircraft and is achieved in part by reducing turnaround time at airports so that it can fly more hours on an average in a day. In fiscal 2004 and the six months ended 30 September 2004, Jet Airways aircraft operated an average of 9.46 and 9.84 hours per day, respectively. By utilizing, it is able to optimize crew movement, and spread its fixed costs over a greater number of flights and available seat kilometers. Because (a) newer aircraft can be scheduled to fly more hours per day as they are reliable and require less maintenance than older aircraft; and (b) its staff is able to achieve quick, efficient, airport turnarounds, which enable it to increase the number of daily flights per aircraft. Jet Airways derives its revenues primarily form transportation of passengers on its aircrafts. In addition, it also earns revenues from carriage of cargo, which consists of courier, postal mail, and commercial cargo. Passenger revenues are dependent on ‘passenger load factors’ and fare levels which are in 2003 is 61.0% and it will increase in 2004 which is from 61% to 67.7%. The branding tagline of Jet Airways is ‘ The joy of flying’ and it reflects in the quality of services it provides to its passengers. Jet Airways has developed systems to track various aspects of its services. On-time performance and the reasons for delays are analyzed every day. It receives and analyzes over 57,000 service tracker questionnaires. Jet Airways has also been ranked by Business world magazine, in 2004, as one of the ten most respected companies in India. As part of its continued emphasis on the quality of its services, in August 2004, the company launched a new programme known as Seamless Customer Care, which involves the participation of employees at the 42 domestic airports it connects. The ride has not been entirely smooth for Jet Airways. Its market share peaked at 46% but has fallen to 35% since the launch of aggressive new low-cost carriers such as Air Deccan, SpiceJet, Indigo, GoAir,etc. jet is still growing, but has failed to keep pace with the domestic market, which is growing by up to 25% a year. However, the acquisition of Air sahara by Jet Airways on 13 April 2007 for 14.5 billion—40 % less than the 22 billion original deal in January 2006—after a long-drawn arbitration 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.
QUESTIONS 1) The market share of Jet Airways is falling due to intense competition. Should Jet continue its focus upon business customers under the current competitive scenario? ANS: Yes, jet has to continue its focus upon business customer under the current competitive scenario, because Jet Airways service and it reflects in the quality of services it provides to its passenger. Jet Airways is one of the few airlines in the world to receive the ISO 9001 certification for its in flight services.
2) The service tracker instrument devised by Jet Airways for tracking its service quality is a better instrument than the SERVQUAL instrument. Do you agree with this statement? If yes, why? ANS: Yes, Jet Airways has developed systems to track various aspects of its services. On time performance and the reasons for delays are analyzed every day. It 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. It undertakes quality audits of in flight and ground services by a dedicated services and product quality team. It endeavours to promptly respond to any customer complaint. The airline believes in meeting and exceeding its customer service expectations which is better instrument than the SERVQUAL instrument.
3) The current yield management systems used by Jet Airways can be improved further by prompt communication with potential customers and ensuring full occupancy in all flights. What is your opinion? ANS: The current yield management systems is improved by prompt communication with potential customers and ensuring full occupancy in all flights by uses SABRE i.e. state of the art yield management system.
THEORTY OF THIS CASE The case, gives an overview of Jet Airway’s success in the domestic airlines Industry. The case takes about the performance of Jet Airways since its formation in 1992. Over the years Jet Airways improved its market share significantly from 6.6% in 1993-94 to 42% in 2000-01. Right from the start Jet Airways focused more on customer service than anything else. It was because of its superior customer service that Jet Airways had become the most popular airlines in India. The case makes a point about the strategy adopted by Jet Airways. Jet Airways started its operations in India with leased aircrafts because buying an aircraft would have cost Jet Airways around $40-$50 where as a monthly lease was as low as $0.4 million. Jet Airways also started its operations with the new Boeing 737-400s, and not the older Boeing 737-200s. This was because the new aircrafts were fuel-efficient and cheaper to maintain. Jet airways also had only one type of airways the 737 in its fleet. This ensured that maintenance and flight crew training was simpler. Because of the above factors, Jet Airways per day was more than of Indian Airlines. Another reason for the success of Jet Airways was its learn structure compared
to Indian Airlines 397 employees per aircraft, jet Airways had only 163 employees per aircraft. The case also highlights the fact that Jet Airways was virtually the only private player in the aviation industry. It did not face any competition from the other private player Sahara Airlines with more private players planning to enter the Indian sky, Jet Airways has to gear up for competition ahead. The company was also embroiled in a controversy regarding its ownership, with Naresh Goyal, chairman of Jet Airways claiming that he owns Jet Airways. Naresh Goyal chairman of JA was the one man show behind JA’s birth Goyal started his career as a marketing executive at the general sales agent with Leabanese International Airlines in Delhi. He then worked with Iraqi Airways for a couple of years, before joining Royal Jordanian Airlines as regional manager. Goyal’s diligence and incredibible ability to memorize flight schedules caught the attention Ali Ghandour who was then chairman & president of Royal Jordanian airlines Ghandour introduced Goyal to the wider world of aviation outside India. In 1974, Goyal decided to get in the GSA business himself and establish Jetair. Transportation representing Kuwait Airways and Air France. By 2001 with revenues of $42.18 million, Jet Airways had emerged as the most popular domestic airlines in India. JA started its operations in 1993; the number of its passengers increased from 0.663 million in 1993 to 5.9 million in 2000-01. By 2001, when other private airlines such as modiluft, East west , NEPC and Damania had stopped their operations, JA not only continuum to survive, but had become a formidable competitior to India’s nat ional domestic airlines. Indian Airlines. JA seemed to be the lone challenger to JA wish Sahara Airlines in the third position. JAis market share increased to 42% in 2001 from 6.6% in early 1990s. in 2001, JA rum 215 flights per day compared to IA’s 208. Unlike the loss making, JA is making profits. At the end of the first year, JA achieved average seat factor close to break even level of 71%.
