The airline has always been a One Man Show i.e. Naresh Goyal himself. Undoubtedly, he is one who built this company from scratch but went to believe that he himself was the company resulting in various blunders. First and the foremost was the acquisition of Air Sahara investing Rs 1470 crores with the sole purpose of taking up the new market players like Indigo, SpiceJet which eventually backfired and the airlines were just left with less operational cash.
Another decision which features in this list was Jet’s decision to buy a mixed fleet of 10 wide-bodied Airbus A330 and Boeing 777 planes. It was the time when the company was still recovering from the previous losses and it increased the workload on the resources. The returns were relatively less as Goyal wanted it to be designed with just 308 seats much below the industry standards against the advice of the top-level managers. It was then designed with 348 seats with 8 first class seats retained adding extra weight to the flight. This was not the worse as it was yet to come. These high class configured seats and flight were operated without earning anything, thus proving to be a liability rather than an asset. As a result, Jet Airways had to lease these flights and finding the leasee was yet another herculean job leading to more expenditure of capital, human resource and time.
It is rightly said that a true leader is one who knows to delegate the job effectively and take right decisions at the right time in the best interest of the company. Sadly, Goyal failed on both the fronts which ultimately cost him his own built organisation.
2. Low-Cost Competitors
People in India are more allured by getting the same benefits at a low cost than to pay more for the same. The advent of low-cost carriers in the aviation sector brought about a revolution in the country. Double-digit growth in the air passengers for the fourth consecutive year is the testimony to change the aviation market is going through. Low fares were like a dream come true for the people who would have never thought of boarding a plane. Jet Airways never saw it coming and squandered their precious capital. Eventually, when they realised it was too late as the capital dearth was mounting, debts increasing and market share decreasing. Indigo finally toppled Jet Airways to become India’s largest Airline.
3. No Investor Backing
The bad patch Jet was going through could have not been that worse provided Goyal would have acted sensibly on the Jet revival plans. Naresh Goyal, the showman was asked step down a year before the Airways finally collapsed which would bring Tata, the pioneer of the aviation sector in India into the pumping in money but he was in no mood to give up resulting in Tata backing off. I strongly believe that mistakes can be improved and forgiven but persistent mistakes cannot be. Goyal had another offer from Etihad Airways where they were willing to increase their stakes if he would back off but yet again the results were same and ultimately, they walked off. Another opportunity came knocking at his door when Delta Air Lines agreed to buy shares at a price of Rs 300 but Goyal insisted on Rs 400 each even though the share prices were hovering between 182- 347 for the last six months and thus blowing off the deal. Finally, Goyal stepped down but it was too late and he could do nothing that to be sorry at the ill fate of the airline.
4. Oil Prices
India is one of the largest importers of crude oil in Asia. Therefore, oil prices have always been the bone of contention for the aviation sector. Soaring oil prices and Rupee playing weak against the dollar has made the airlines to invest a lot in fuel. Again, lack of operating capital for the Jet Airways proved to be its Achilles’ heel and forced them to stop flight operations due to unavailability of fuels and suppliers backing out to supply them.
Now the company is undergoing insolvency proceedings under Insolvency and Bankruptcy Code,2016 and we can just hope that Jet Airways doesn’t turn out to be another Kingfisher Airlines or Indian Airlines. The rise to zenith and the fall to the plinth of Jet Airways is a lesson to all the entrepreneurs and budding entrepreneurs as to how management and decision making can change the very fate of the organisation, which is now hoping for a silver lining in the clouds to save its very existence.
Comments
om prakash
#PTU_GRADUATED
Your research and brainstorming is really worth. I came across it for the first time and am truly amazed. Keep up the good work tarun
23 Jul 2019, 12.17 PM
+Read Replies (1)
Tarun Mishra
Tarun Kumar Mishra #MBAIITKANPUR
Thanks a lot
23 Jul 2019, 12.30 PM |
VIKASH KUMAR Roy
Good Content
23 Jul 2019, 09.16 PM
+Read Replies (1)
Tarun Mishra
Tarun Kumar Mishra #MBAIITKANPUR
Thanks sir
24 Jul 2019, 02.15 AM |