Jet Airways

JET AIRWAYS

Airline Industry in India 454 airports and airstrips

(includes Operational, Non Operational, Abandoned and Disused Airports) 127 are owned & operated by AAI

16 - international, 7 custom airports, 28 civil enclaves Scheduled domestic air services - available from 82 airports

May 2007- May 2008 25.5 million domestic & 22.4 million international passengers 20% growth – highest in the world

Growth Rate Projections (for next 5 yrs) 15% p.a (Passenger Traffic) 11.4% p.a (Cargo Traffic)

History1911

1932

1938

1946

1948

1953

First commercial flight Airmails from Allahabad to Naini(10 km) The Aviation Department of Tata Sons Ltd. Established Tata Airlines (successor to aviation division of Tata

Sons) Tata Air Lines converted into a public Company and

renamed Air India Limited Air India International incorporated

Nationalization of Aircraft Industry Air India (serving the international sectors) Indian Airlines (serving domestic sectors)

Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air Services of India

History

1986

1990

1994

2003

2007

2008

Private Sector Players permitted as Air

taxi operators Players including Jet, Air Sahara, NEPC, East West,

Modiluft,etc started service Open Sky Policy Private Carriers permitted to operate scheduled services Entry of low-cost carriers Merger of Indian Airlines into Air India Acquisition of Air Sahara by Jet Airways Kingfisher acquired 49% stake in Deccan Aviation

Regulatory Authorities Ministry of Civil Aviation

Responsible for the formulation of policy, development and regulation of Civil Aviation. Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air

Other Attached/Autonomous Organizations:

Directorate General of Civil Aviation (DGCA) Promote safe and efficient Air Transportation through regulation and proactive

safety oversight system

Bureau of Civil Aviation Security (BCAS) Regulatory authority for civil aviation security in India

Airport Authority of India (AAI) Accelerate the integrated development, expansion and modernization of the

operational, terminal and cargo facilities at the airports

Policies

Open Sky Policy FDI

Airports 100% for green field operations 74% for existing airports - 100% with special permissions 100% tax exemptions for 10 yrs.

Airlines 49% in domestic airlines - 100% for NRI’s 74% in cargo & non-scheduled airlines

Indian Aviation

Full Service Airlines

Air India, Jet

Airways etc.

Low Cost Airlines

Air Deccan,SpiceJet

etc.

Regional Airlines

Emric Air,Air

Dravida etc.

Charter Airlines

Club One Air,

Deccan Aviation

etc.

CargoAirlines

Blue Dart,Aryan Cargo

Express etc.

Market Share in Domestic Market

Mar'05 Oct'05 Feb'06 Mar'07 Post Consolidation0

10

20

30

40

50

60

70

80

90

100

4335 36

2331

37

28 23

22

22

14

12

10

8

5

11

14

17

1 3 1 3

68

11

28

5 5

84

4

46

66

Others

Indigo

GoAir

SpiceJet

Kingfisher

Air Deccan

Air Sahara

Indian

Jet Airways

In Post Consolidation Jet includes Air Sahara & Kingfisher includes Air Deccan Market Share is based on their Capacity Source: B&K

Securities

Full Service

Price

Jet Airways

Indian AirlinesKingfisher

Air Deccan

SpiceJet

IndigoGo Air

High

Low

HighLow

Service vs. Price

Source : http://www.foolonahill.com/mbaaviation.html

Cost Structure


Jet Airways Founded in 1993, Chairman - Mr.Naresh Goyal

HQ in Mumbai Country’s second largest international airline Largest domestic airline - 31%

Primary base - Mumbai's Chaatrapathi Shivaji Airport Secondary hubs - Bangalore, Brussels, Chennai, Delhi,

Hyderabad, Kolkata and Pune.

April,2007 - Acquired Air Sahara - JetLite

Now JetLite integrated into Jet Airways

International Network

Domestic Network

Fleet Plan

Jet Airways - Performance

Annual Revenues - Rs.9481.5 crores (2007-08)

Rs.7401 crores (2006-07)

Profit(Loss) After Tax - Rs.253 crores loss (2007-08)

Rs.27 crores profit (2006-07)

- All Other Domestic Players showed loss(2006-07)

Operational Highlights

Operational Parameters 2007-08 2006-07

Number of departure 126,676 119,369

Available Seat Kilometers (ASKMs) Million 24,447 17,698

Revenue Passenger Kilometers (RPKMs) Million

16,914 12,307

Passenger Load Factor % 69.2% 69.5%

Revenue Passengers (Numbers) 11,428,910 10,726,874

Average Fleet Size 66.3 56.1

Revenues & Expenditure Split-up

84.4

0.2

6.8

1.5 7.1

Total Operating Revenue 2007-08

Passenger Revenues Revenues from Excess Baggage & Courier

Revenues from Cargo Other RevenuesNon-Operating Revenues

34.5

65.5

Total Operating Revenue 2007-08

International Opera-tionsDomestic Operations

33

10

125

8

6

26

Total Expenditure 2007-08

Fuel

Selling & Distribution

Payroll

Interest

Depreciation

Aircraft Lease Rentals

Other Operating Expenses

Jet Airways vs. Domestic Players (2006)

Jet Airways vs. International Players (2006)

STP Primary Segments (Geographic) - Domestic & International

Customer Segments First class, Premiere(Business) class & Economy class

Target Segments Premiere(Business) class

Business travelers, contribute 48% of passengers & 66% of revenues,

ready to pay higher prices, last time booking, don’t like transit Economy class

Leisure travelers, prefer low cost airlines, ready for transit if there is cost advantage, large % of passengers

Seat Allocation – Yield Management Technique Positioning – High value for High price

Unique Selling Price – Customer relationship and Punctuality

Seating in flights for Segments

88.6

11.4

Flight Class

Economy Business

Fleet SizeAir craft No. Seats per flight

First Premiere Economy

Airbus 330-200 11 - 30 190

ATR 72-500 11 - - 62

Boeing 737-400 04 - 24 112

Boeing 737-700 13 - 16 96

Boeing 737-800 33 - 24 120

Boeing 737-900 02 - 28 132

Boeing 777-300ER 10 08 30 274

Total 84

Flower of Services

Core -Transport

Information

Consultation

Order Taking

Hospitality

Safe Keeping

Exceptions

Billing

Payment

Information - Reg. the org., flight schedules, ticket fares, promotion schemes etc.

Through website, call service, sms, employees etc.

Consultation - Reg. the choices of class, routes to a destination & special menus for frequent fliers

Order taking - Booking - through phones, fax and internet

- Ticket Office, Call Centres, Company Website & Agents

Hospitality - Most important differentiating factor (from ticket booking to post flight help)

Safe keeping - Luggage & Children

Exceptions - Special requests reg. meal preferences, special amenities for elderly people or children, medical needs etc.

Billing - Charges split, E-mail bills etc.

Payment - Credit card, Travellers cheque, Special payment privileges for frequent fliers

Impact of IT on Ticket Booking

27

1540

10

8

Ticket Booking - FY'07

Online DirectOnline Travel AgentsTravel AgentsCall CentreAirline Ticket Office

30

20

32

10

8

Ticket Booking - FY'08

Online DirectOnline Travel AgentsTravel AgentsCall CentreAirline Ticket Office

Levels of Product

Product - Service On Ground Services

Check in options - Airport check-in, Tele Check-in, Web Check-in,

Kiosk Check-in, SMS Check-in, Check-in while walk-in,

One Time Check-in on Return Journey, Through Check-in Airport Lounges Coach Services

In-flight Services Classes of Service - First class, Premiere class & Economy class Convenience & Safety -Towels, Pillows & Blankets, Reading material,

First Aid, Smoke detectors, Bassinets, Child Care, life jackets & seat cushion Cuisines Entertainment - Jetscreen – Movies, TV programmes, Games, Music, In-flight

communicator, Online magazines etc. JetWings (in-flight magazine), JetBoutique (in-flight shopping catalogue)

Product - Service

Special Serviceso Infant and child care, wheel chair assistance, expectant mothers,

unaccompanied minors, medical emergencies, travelling with animals &

carriage of stretchers

JetMobile

JetKids

JetEscapes

Cargo

JetPrivilege – Frequent Flyer Program

Membership tiers – Blue, Blue Plus, Silver, Gold & Platinum Personalized web access JP Miles - 13 quarters validity Bonus JPMiles on e-Services Additional baggage allowance Guaranteed reservations up to 24 hrs. prior to departure Waiver on cancellation fees Membership Tier Bonus

Earning & Redeeming JP Miles Eg: Chennai to Thiruvananthapuram (Earn Mile-383 & Redeem Mile-6894) Airline Partners - Air France, American Airlines, ANA, Austrian Airlines,

Brussels Airlines, Cathay Pacific, Dragonair, Etihad Airways, Gulf Air, JetLite, KLM, Lufthansa, Northwest Airlines , Qantas, South African Airways, SWISS, United Airlines and Virgin Atlantic.

Price

Economy & Club Premiere Fare Discounted fare for senior citizens & defense

personnel Advance Passenger Excursion/ APEX Fares One Fare Night Saver Fares Check Fares US Dollar Fares & Visit India Fares

Place

Place of Service - Aircraft

Various Destinations

Promotion

Offers Companion Free Offer, One Fare, Concessional fares, JetPrivilege Offers,

Jet Airways Citibank Credit Cards, Corporate Deal Offers, International Specials, Camp Rock contest, Festival specials, Student specials, Surprises etc.

Advertising and Branding

Hoardings Brand Ambassadors Sponsorships Event Organization

People

Employees Pilot, Cabin Attendants, Engineers, Customer Service Agents, Securities,

Marketing, Sales & Reservation employees

Customers

Partners Airline Partners - Air France, American Airlines, ANA, Austrian Airlines,

Brussels Airlines, Cathay Pacific, Dragonair, Etihad Airways, Gulf Air, JetLite, KLM, Lufthansa, Northwest Airlines , Qantas, South African Airways, SWISS, United Airlines and Virgin Atlantic.

Code Share Partners - Air Canada, All Nippon Airways, American Airways, Brussels Airlines, Etihad Airways and Qantas

Co-Brand Cards - CitiBank Conversion Partners - BarclayCard, CitiBank, Deutsche Bank AG, HDFC Bank,

HSBC, ICICI Bank, SBI Card & Tata Cards Car Rental Partners - Avis, Hertz Hotel Partners - Global Hotel Alliance, Hilton Family Hotels, Hyatt Hotels &

Resorts, InterContinental Hotel Groups, ITC etc. Lifestyle Partners - Globus and Golf Fee Card International Publishing Partners - Fortune, The Economist and TIME Retail Partners - Ferns n Petals Telecommunication - Matrix Cellular Services

Competitors

International market - British Airways & South West Airlines

Domestic market - King fisher, Indian Airlines, GoAir, Spicejet & Indigo

Process

People Processing

People physically enter the service system to receive the service. Aircraft is the service factory where service is delivered.

Possession Processing

Cargo Luggage & Courier

Physical Evidence

Servicescape Servicescape usage - Interpersonal Complexity of Servicescape - Elaborate

Flight Offices - Org. & Ticket Booking Agents Virtual Servicescape

Service Quality


Service Quality


Strategies to manage the Capacity & Demand

Check Fares Automated Rostering System Planning and Scheduling Systems Code Sharing Outsourcing ramp handling, passenger handling, ticket

checking, cargo and loading and unloading in Delhi and Mumbai

Automation to drive efficiency and improve response time Faster page and application download times for its site

Corporate Social Resposibility

Magic Box Fund raising inside the flight for disaster relief, education

& healthcare for poor and programmes to prevent exploitation of women

Flights of Fantasy Underprivileged children and children with special needs are

taken on specially organized flights (on Children’s Day)

PEST Analysis Political Issue

License issue for international operation

Infrastructural constraint ATF price policy

Economic Effects Rising income level Reduced fare but yet not enough

Social Effects Sound Pollution Plane hijacking 9/11 Incident

Technology Effects Modernization of aircrafts Modern technology like CAT3

and ILS

SWOT Analysis Strengths

Market driver Experience exceeding 14 year Only private airline with

international operation Market leader Largest fleet size

Weaknesses Loosing domestic market share Old fleet with average age

around 4.79 years Scope for improvement in

in-flight service Weak brand promotion

Opportunities Untapped air cargo market Scope in international service

and tourism

Threats Strong competitors Fuel price hike Overseas market competition

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