BUSINESS

Flying high

Jet Airways is banking on customer care to give it an edge over low-cost carriers

PTI11_29_2017_000040A Change agent: Jet Airways chairman Naresh Goyal | PTI

Twenty-five years ago, the Indian aviation sector was an entirely different game, with the domestic market restricted to the state-owned Indian Airlines. But, things were about to change. Naresh Goyal, who was a representative for some international airlines through his travel agency, Jet Air Private Limited, was all set to cash in on the impending boom in the sector.

Jet Airways was started as an air-taxi service, and J.R.D. Tata inaugurated its first flight, between Mumbai and Ahmedabad, on May 5, 1993. In the first year, it had a fleet of four leased Boeing 737-300 aircraft, operating 28 daily flights to 12 destinations. Today, it has a fleet of 119 aircraft, serving 65 destinations in India and overseas. Through partners, it connects 450 destinations.

Jet Airways was not the only one taking to the skies in the 1990s. But most others shut shop over the years for various reasons. “Jet set the standard for Indian aviation around the world,” said Vinay Dube, CEO of Jet Airways. “Almost every facet of the airline’s customer experience was new and an elevation of what to expect—be it a diversified network, the operating reliability, the customer experience and the broad set of partners. Also, what was unique was the sheer grit, determination and force of the ownership.”

In the beginning, Gulf Air and Kuwait Airlines held 20 per cent stake each in Jet, and the rest was held by Goyal. But, with the government forbidding foreign investment in Indian carriers, Goyal bought out the company in 1997. In 2013, after the sector was opened up for foreign carriers (up to 49 per cent investment was allowed), he sold a 24 per cent stake to Abu Dhabi-based Etihad Airways.

There have been many firsts in the industry to Jet’s credit. It was the first to launch a frequent flyer programme in India, the first private Indian airline to fly abroad and the first to launch a co-branded airline credit card. By 2010, Jet became a leader in the domestic market, with a share of 26 per cent. It still holds a market share of around 17 per cent, with a double-digit passenger growth.

Helped by a burgeoning middle class and new airports, India’s aviation market has been growing rapidly. The International Air Transport Association expects India to become the third largest air passenger market by the mid-2020s, after China and the US. Jet is all set to cash in on the opportunity, and has ordered 150 new Boeing 737 Max airplanes. “These narrow-body aircraft will be flown in the domestic as well as international markets,” said Amit Agarwal, deputy CEO and CFO at Jet Airways. “Domestic operations will continue to be the backbone for us. But, these aircraft also have a longer range. So, on this aircraft I can go as far as Kuala Lumpur or Kenya. So, all these destinations, which were not possible to be covered by narrow-body aircraft, we will be able to cover with the 737 Max.” These new planes are more fuel efficient than those currently in service.

Jet’s biggest competitors in the domestic market are budget carriers IndiGo and SpiceJet. At one point, Jet was also offering low-cost services through Jet Lite and Jet Konnect. However, it stopped those services three years ago in a bid to standardise its fleet and offerings. Said Agarwal: “When we started this journey [of a unified brand], our aircraft were utilised 11 hours a day. Because, of the standardisation of the fleet, we have been able to take it to 13.5 hours a day, which added 15 aircraft worth of capacity without incurring any capital cost.” A constant focus on costs has also helped the airline bring down the non-fuel costs.

Jet is planning to continue with the one-brand strategy, but will “unbundle” the offering, so that customers pay only for the services they use. “So, full service does not mean you will get every service for free,” said Dube. “Like the global industry has moved, we will make sure that people have a choice and have to pay for only those things that they actually want. We are not in it to be another low-cost carrier. We will continue to be a full-service provider where customer experience is central to what we do.”

With the new planes, Jet is planning to increase capacity on existing routes. The plan is also to strengthen hubs like Mumbai, Delhi and Bengaluru, so that it can offer more comfortable connections to customers. Also, given that many of the metro airports and routes are saturated, additional capacity will also be added in other cities. Jet now flies to European destinations from Chennai and Bengaluru, eliminating the need for south Indian travellers to change flights in Mumbai or Delhi.

Currently, apart from Air India, Jet Airways is the only Indian carrier that flies to Europe and North America. Over the years, Jet has inked many partnerships with international carriers. “There will be some markets that we have to and we will service directly, like Mumbai-London, and there are some markets where it makes more economic sense to link up with a partner network,” said Dube. In November 2017, Jet signed an enhanced cooperation agreement with Air France-KLM, extending the partnership that was inked in 2014. Apart from Etihad and Air France-KLM, it has codeshare agreements with 20 airlines worldwide.

While Jet has ambitious plans for the future, it does not expect it to be a smooth flight. “The near-term challenge in Indian aviation is always the time lag between the cost of fuel and price of a ticket,” said Dube. “We are also operating in one of the lowest ticket price regimes in the world, with one of the highest fuel prices. That equation must change over time. Infrastructure, in terms of airports, parking bays, airspace management and air traffic control are all challenges we will continue to face being a big player.”

Jet is banking on its customer service to overcome the challenges. “We have always been clear that customer service will always remain at the top and at the core,” said Agarwal. “If you have a satisfied customer, everything else will come by. That gives you the significant advantage of getting the best practices from across the globe.”