The Jet Airways Story

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Case Details:

Case Code : BSTR022
Case Length : 9 Pages
Period : 1992 - 2002
Organization : Jet Airways
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Takeoff

Naresh Goyal (Goyal), chairman of JA was the one-man show behind JA's birth. Goyal started his career as a marketing executive at the general sales agent (GSA) with Lebanese International Airlines in Delhi.

He then worked with Iraqi Airways for a couple of years, before joining Royal Jordanian Airlines as regional manager. Goyal's diligence and incredible ability to memorize flight schedules caught the attention of Ali Ghandour, who was then chairman and president of Royal Jordanian Airlines. Ghandour introduced Goyal to the wider world of aviation outside India. In 1974, Goyal decided to get into the GSA business himself and established Jetair Transportation representing Kuwait Airways and Air France. Simultaneously Goyal was appointed regional manager of Philippine Airlines. Over the next few years, Goyal expanded his network picking up agencies for some more airlines. He was a regular member at the annual general meetings of International Air Transport Association (IATA), the global aviation body...

The Success Formula

JA started its operations with leased aircrafts. The idea was to expand faster by using funds to lease more aircrafts than buying one or two. A Boeing 737 could cost anywhere between $40 and $50 million, whereas a monthly lease could be as low as $.4 million.

The most crucial decision was the choice of aircraft. While Damania, East West and ModiLuft who also started their operations at the same time opted for the older Boeing 737-200s, JA chose newer 737-300s, whose lease costs were at least 40% higher. Four planes(about three years old) were leased from Ansett Airlines. Although the 737-300s were more expensive to lease they were more fuel efficient (consumed 8% less fuel) and were cheaper to maintain. Goyal felt that the young fleet would help attract customers. Analysts felt that by having one type of aircraft-the 737-in its fleet, JA made the maintenance and flight crew training far simpler. Spares were common and inventories were lower as well. For engineers, dealing with one type of aircraft...

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