Jet Airways (India) Private Limited History
Telephone: 91 (22) 2850 5080
Fax: 91 (22) 2850 1313
Sales: $550 million (2003 est.)
NAIC: 481111 Scheduled Passenger Air Transportation
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.
- Jet Airways begins domestic operations flying Boeing 737 jets.
- Kuwait Airways and Gulf Air sell their stakes in Jet Airways.
- A regional network is launched with turboprop aircraft.
- The first international services are started.
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.
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.
- "Air Sahara, Jet Record Losses in '02-03," Business Standard, April 13, 2004.
- "Airlines' Market Share of Domestic Passenger Traffic," India Business Insight, May 31, 2003.
- Almazan, Alec, "Indian Domestic Carrier to Add Two B737-400s to Fleet," Business Times (Singapore), July 13, 1994, p. 20.
- Anand, Byas, "Jet Kicks Off Job Rationalisation," Economic Times, November 18, 2003.
- ------, "Penning a New Take-Off Plan," Times of India, June 3, 2003.
- Baby, Soman, "Gulf Air to Help Launch Indian Airline," Moneyclips, April 19, 1993.
- Ballantyne, Tom, "Jet Propelled into Action," Airline Business, December 1, 1997, p. 20.
- Chatterjee, Purvita, "We Don't Believe Price Wars Are the Answer," Business Line, August 19, 1999.
- Cuckoo, Paul, "Jet Setter," Economic Times of India, August 6, 1999.
- "Domestic Airlines Vie for Market Share," Hindu (Chennai), September 6, 1999.
- Endres, Gunter, "KLM Signs Up Indian Ally--Jet Airways," Flight International, September 6, 1995, p. 12.
- Fernandes, Edna, "Jet Airways Set for IPO and Expansion," FT.com, August 5, 2002, p. 1.
- Gupta, Nandini Sen, "High Market Power, Low Cost," Economic Times, March 17, 2000.
- "India's Private Domestic Airlines," Financial Times (London), August 13, 1993, p. 3.
- Ishmail, Fauziah, "Airline Eyes Stake in Jet Airways," Business Times (Malaysia), May 8, 1996, p. 1.
- "Jet Airways CEO Clarifies on Quit Move," Hindu (Chennai), November 29, 2002, p. 1.
- "Jet Airways Plans Public Issue," Financial Express, December 3, 2003.
- "Jet Airways Plans to Go Public," Business Standard, April 13, 1995, p. 13.
- "Jet Airways Will Sport a New Look from Today," Times of India, October 21, 1999.
- "Jet Mulls Stake in AI to Fly Abroad," Business Line, August 23, 2000.
- Kamath, Vinay, "Jet Airways Set to Expand Regional Feeder Network," Business Line, September 27, 1999.
- Kripalani, Manjeet, "Look Who's Gaining Altitude in India," Business Week, September 14, 1998, p. 174.
- Louden, David, "Fledglings Enter India's Open Skies," Business Review Weekly (Australia), June 4, 1993, p. 68.
- Malhan, Sangita P. Menon, "Flying Is His Forte," Times of India, March 8, 2000.
- Marcelo, Ray, "India Frees Up Private Airlines to Fly to South Asian Destinations," Financial Times (London), March 22, 2004, p. 5.
- Mehta, Nina, "Jet Airways Considering IPO," Hindustan Times, November 25, 2003.
- Parsai, Gargi, "Jet Airways Restrained from Bidding for Indian Airlines," Hindu (Chennai), September 30, 2000.
- Phadnis, Ashwini, "New CEO of Jet Airways Targets $60M Profit," Business Line (The Hindu), July 16, 2003.
- ------, "'Stabilisation, Market Research High on Agenda': Mr. Peter Luethi, Chief Operating Officer, Jet Airways," Business Line, May 19, 2003.
- Prasad, Swati, and Ashish Gupta, "Can Jet Get Its Nose Back Up?," Business Today, December 21, 2003, p. 62.
- Shankar, T.S., "Priority for Fleet Strength--Jet Airways Chief," Hindu (Chennai), August 7, 2000.
- Sidhva, Shiraz, "Passengers Get a Choice--India," Financial Times (London), Survey of Business Air Travel, April 20, 1995, p. IV.
- Slater, Joanna, "High-Flyer Seeks Airspace: India's Most Successful Airline Has Ambitions to Fly Beyond the Country's Borders, But the Government Wants to Protect the State Carriers," Far Eastern Economic Review, December 5, 2002, p. 37.
- Tassell, Tony, "Jet Airways Leaves Its Indian Rivals Standing: Newer Aircraft Have Given Naresh Goyal's Carrier a Private-Sector Lead," Financial Times (London), Companies and Finance, January 4, 1997, p. 13.
- Tay Han Nee, "Sky High Plans for Jet Airways," Travel Trade Gazette Asia, December 15, 2000.
- Zaheer, Kamil, "Jet Airways CEO Kardassis Quits," Economic Times, July 7, 1999.
Source: International Directory of Company Histories, Vol. 65. St. James Press, 2004.