Naresh Goyal, who already owned Jetair (Private) Limited (which providedsales and marketing for foreign airlines in India) set up Jet Airways as a full-service scheduled airline that would give competition to state-ownedIndian Airlines. Indian Airlines had enjoyed a monopoly in the domestic market between 1953, when all major Indian air transport providers were nationalised under the Air Corporations Act (1953), and January 1994, when
the Air Corporations Act was repealed, following which Jet Airways received scheduled airline status
Jet Airways and Air Sahara were the only private airlines to survive the Indian business downturn of the early 1990s. In January 2006, Jet Airways announced that it would buy Air Sahara making it the biggest takeover in Indian aviation history. The resulting airline would have been the country's largest but the deal fell through in June 2006. However, a modified deal went through in January 2007.
Lower wages in India compared with the West are not the only explanation for Jet Airways' relatively low cost base by international standards. The company has also been able to lower its costs by "sweating its assets", i.e. getting the maximum utilisation out of its aircraft fleet by minimising turnaround times between flights, similar to the leading European/North American low-cost, "no frills" carriers. This has partly helped it to offset the high costs of the airport infrastructure as well as jet fuel in India, which are higher in India than the international average.
Jet Airways does not own its brand. The brand is owned by Jetair Enterprises Ltd., a separate company substantially owned by Naresh Goyal, which licenses the brand to the airline in return for an annual payment. This arrangement is very similar to the terms governing the use of the "easy" brand by the easyJet Airline Company Limited (the name under which easyJet has been incorporated). Under the aforesaid arrangement, Sir Stelios Haji-Ioannou, the founder and largest individual shareholder of easyJet Airline Co. Ltd. has sole ownership of the "easy" brand and licenses it to that airline for a specified payment. This kind of arrangement is of vital importance should the concerned airlines become the subject of a hostile takeover bid because the bidders will not automatically acquire ownership of their takeover target's brand and without access to the brand the takeover target will be less valuable.
The Air Sahara takeover
On January 2006...