Wednesday, January 09, 2013

Jet’tisoning a brand!

Despite holding pole position in the Indian aviation industry, Jet Airways was known for its apathy towards branding and marketing. 4Ps B&M does a snapshot seat-of-the-pants recap of Jet’s brand journey and the new branding move by Goyal to combine low cost carrier operations under JetKonnect

Exactly five years ago, in April 2007, Jet Airways decided to buy Air Sahara (for the second time, after the previous deal fell through). That was a time when it was flying high and seemed to be within touching distance of becoming the indisputable lord of Indian skies. Its revenues had increased by a whopping 21.5%, closing at Rs 7,401.31 crore for FY 2006-07 as compared to Rs 6,087.57 crore a year ago. Buoyed by its performance, the airline was quick to declare a dividend of Rs 6 on equity shares of Rs 10 each for the financial year 2006-07. Nobody could have faulted the airline and clearly all straws in the wind suggested that the airline was destined to peak new highs in the Indian aviation industry. Things were working to the airline’s plans and the famed merger with Air Sahara was supposed to fuel its future growth.

But the merger, instead of being a seamless exercise in integration and a trigger for growth, brought along a bagful of problems. Instead of deepening the airline’s bench strength for skilled manpower and adding to its reservoir of talent, the airline found itself saddled with redundant resources that could not be put to productive use. As a result of the merger Jet Airways suddenly found itself in a situation where there were crew members far in excess of its own requirements and with more number of expensive pilots than were needed to fly its machines. Also, around this time, economic winds had started turning baleful and the fangs of global recession had started biting. The aviation industry across the world, including in India, found itself stuck in the storm clouds of an intensifying recession. Airlines’ profits took a sharp beating and revenues for the industry plummeted precipitously. Like others, Jet Airways too found itself in the crosshairs of a blowing ill-wind. Its problems were compounded because the adverse business environment foreclosed any options that it may have had for deploying its surplus human resources. As a result, the airline’s management found itself faced with a knotty issue. After keeping this baggage grounded for nearly a year, the airline finally moved to cut the Gordian knot. In October 2008, the airline handed out pink slips to around a 1,000 of its employees.

Unfortunately, for Jet Airways the move backfired. The en masse sacking of employees kicked up a media hysteria and forced the airline to beat a hasty retreat. Two days later the airline reinstated all sacked employees but the episode left a lingering doubt about the health of the airline besides also denting its reputation in the public eye. Also, the market fallout was swift and brutal. Its stock price took a hammering, sliding from Rs.955 on December 17, 2007 to Rs. 115 on March 12, 2009. In a matter of months, the airline which had its nose in the cloud found itself buffeted by turbulent air pockets and desperately seeking a safe landing.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.

Posted by at
Labels: , , , , , , , , , ,