Communicating in a Crisis and the Role of a Business Leader: The Case of Jet Airways
Jet Airways: Background
Jet Airways (India) Private Limited was a reputed private airline in India with an average fleet age of 4.45 years. Jet flew to 63 destinations spanning the length and breadth of India and beyond, including New York (both JFK and Newark), Toronto, Brussels, London (Heathrow), Hong Kong, Singapore, Kuala Lumpur, Colombo, Bangkok, Katmandu, Dhaka, Kuwait, Bahrain, Muscat, Doha, Riyadh, Jeddah, Abu Dhabi and Dubai. The Airline carried 1.28 million passengers out of 4.08 million passengers carried by the whole airlines industry. It enjoyed a reputation for punctuality and outstanding service and consequently attracted a large proportion of business travelers. Currently it operates a fleet of 97 aircrafts, which includes 12 Airbus 330-200; 20 ATR 72-500 aircraft;11 Boeing 737-700;42 Boeing 737-800; 2 Boeing 737900 and 10 Boeing 777-300 ER. The management had ambitious plans to develop its own maintenance hangers and pilot training centers
Jet Airways: Origins
Recipient of several business and leadership awards, Company founder Naresh Goyal completed his graduation in Commerce in 1967 and joined the travel business at the age of 18 as a general sales agent (GSA) for the Lebanese International Airlines. From 1967 to 1974 he learnt the intricacies of the travel business through his association with several foreign airlines.
Payal Mehra, Assistant Professor, Indian Institute of Management, Lucknow. Email: email@example.com
The trial version of the case was presented at Case Writing Conference organized by IMT, Nagpur in 2010. The author would like to thank the panelists for their suggestions which helped in the development of the case.
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In May 1974, he formed his own company, Jetair (Private) Limited, to mar ket other foreign airlines in India. Naresh Goyal was involved in developing studies of traffic patterns, route structures, operational economics and flight scheduling. 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. This provided an opportunity to Goyal who established Jet Airways (India) Private Limited in 1991. It commenced commercial operations on May 5, 1993. At that time, Jet Airways claimed to be the only profitable privately owned airline in India. Indeed, by 1997, five of the seven airlines 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.
On March 22, 2004 Jet Airways and rival private airlines in India were free to begin flying outside the country. Jet had borrowed about $800 million to finance new aircrafts. Jet was poised to profit from an expected extension of flying rights throughout Asia. Colombo, Sri Lanka, was the first such international destination. Flights to Bangladesh and Nepal followed soon after. An initial public offering of 25 percent of shares, discussed since 1995, was also in the works. Over the next few years Jet established itself as a leading Indian player, becoming a case study for in-flight excellence. Possibly excited by this euphoria, industry insiders say, the management made its first big gamble by eying Air Sahara in 2006. Apart from Jet and Air India, Air Sahara was among the only three Indian carriers that flew abroad during that period. Naresh Goyal moved in to buy Sahar a a year later for Rs 1,450 crores. Jet Airways fulfilled its desire to be the only private Indian carrier to fly abroad in 2006. Acquiring Sahara meant a huge drain on Jet’s resources, both on financial and management...