What are the Reasons for Jet Airways closure, and what will be the Future of the brand?

Jet Airways, once the top-notch airline in India, is now facing problems, and before looking into it, let’s start with a background of the brand first. The company came into being when the upper middle class and elite class prefer air travel only, and because of this, Jet Airways did extremely well and becomes the first choice for the passengers till 2005. The strategies of the brand were to provide excellence of services, but they charge as per their demand, and customers pay them without hesitation, so the business was doing great from the era of the 1990s till mid-2000s.

Jet Airways

What happened after 2005? What are the reasons behind Jet’s Closure?

Later in 2008, when the financial crisis hit the market, the Indian aviation market declined as it was an emerging market at that time, and the passengers dropped, due to which companies had to reduce the prices. But, when the fuel prices increase, all the brands have to raise the costs, and Jet did the same.

Things changed after 2005 when LCCs started to take over the place of Jet Airways with their customer-oriented pricing policies, and Jet found it difficult to compete with the new brand because of the high cost it charges throughout its career, due to which, the company’s business model affected badly.

Even though Jet did the same as other aviation brands, however, the former privately-owned firm had to face other obstacles, too. Firstly, it acquired Air Sahara at the time of crisis, and it had to pay a hefty sum of money. Secondly, other low-cost airlines started rising in India’s skies, and Jet couldn’t do anything but started losing its passengers. It was a tough time not only the company’s shareholder but for the workers, too. Jet needed to reduce its operational costs, but instead, it fired 1900  employees as the brand was under the burden of heavy debt, and that created another crisis for the company. Workers came out on the streets to protest against Jet, and then Naresh Goyal had to re-hire workers again. Things seemed better, but there were much more to come.

The Roller-coaster journey of Jet Airways

Later in 2009, pilots of the airline came out on the roads for protest, because the company didn’t let them create their union, and the owner solved this issue after a great hustle. In the same year, Jet launched another subsidy, Jet Konnect, and it was also a low-cost airline like JetLite (Air Sahara). The newly launched airline did a good business in starting years, but the company was still in debt, and it has to low its cost not only for the full-length carrier but for the subsidies, too. So, it was best only for short-term profit as the company flourished its business by 20% in India.

In 2012, the government of India allowed foreign airlines to take up a share in Indian airlines, and then Etihad lined up with Jet Airways by buying 24% share of the company. Later in 2013, Jet decided to compete with its national rivals; SpiceJet and IndiGo. Both airlines were low-cost carriers, and because of them, he also reduced the cost, but it wasn’t a smart move as the brand kept the high running costs. The year 2013 was a bit better for Jet, but 2014 was a complete disaster because of debt.

In 2015, Jet Airways again managed to reduce its losses, and the year 2016 was a good financial year, too. Things again changed in 2017, when IndiGo started dominating the Indian skies because of low-cost business strategies, and the international aviation market was also not ready to give the brand any chance. Meanwhile, fuel prices surged massively, and Jet started earning good again for a while. However, many investors refused to invest in the brand because of the chairman, Naresh Goyal. They wanted him to resign, but he stubbornly stayed there to save his seat. At last, he stepped down in 2019, but Jet becomes a failure now as many investors leave the company one by one, their fleet size reduced or almost finished in less than a year.

Etihad Airways

Future of the Brand

Right now, there is only one hope for the brand, and that is Etihad Airlines. If Etihad purchases Jet Airways, it still has to pay its $1.2 billion debt, which is massive, and Etihad is also facing financial crises, so the future of Jet is not so bright.

Please follow and like us:
0
Powered by ABIEHost.com