THE RISE AND FALL OF
JET AIRWAYS: A CASE
STUDY
EXECUTIVE SUMMARY
Jet Airways saw a phenomenal rise from its humble beginnings when the Indian skies
opened up to private enterprise, In 1993 it started as an Air Taxi Operator with four leased
Boeing 737s and moved on to „scheduled airline status‟ at the beginning of 1995. By the early
2000s, the airline offered over 40 destinations in India and two destinations outside India,
operating over 1,900 flights weekly. The airline‟s fleet grew from four aircraft in 1993 to 42
aircraft comprising 34 Boeing 737s and eight ATR 72-500s. The airline would go on to buy 10
777s in 2005-06 just after purchasing 10 Airbus A330s to expand its long-haul international
flights. In fact, Jet Airways‟ long-haul operations took passengers as far away as Toronto, San
Francisco, London, Johannesburg, and Singapore, among many other global cities. A scene
reminiscent of Jet Airways‟ earlier years – the airline started with a small handful of 737s and
went on to include turboprops and then larger wide bodies. In 2010, Jet Airways became the
country‟s largest carrier by passenger volume, becoming a significant international airline. The
airline even flirted with joining the Star Alliance, a deal that never went through. Nevertheless,
the last few years have seen steady decline. The obvious reasons as seen by experts for the
decaying financial health of aviation sector companies are summarized in brief here. First is the
rising of fuel prices. Here, the airline company has no control, as airline turbine fuel (ATF) price
is controlled by oil exporting countries. Second, the depreciation in the value of the rupee adds to
the cost of imported ATF. Third, unsustainable competition in the domestic market is killing.
Airlines sometimes sell tickets at a loss to beat competition in the market and thus remain in
business by depending upon volume and market share. Fourth, it is the higher capacity addition
which works as a multiplier of the loss. There is a technical term, „aviation-seat-kilometer‟,
which is the base to measure loss or profit. If an aircraft has 100 seats and it flies to a destination
at 100 km, then 100x100=10,000 will be the aviation-seat-kilometer. Seat capacity has to be kept
at an optimum level so that there is profit. Fifth, there should be a symbiotic correlation between
these two important parameters for a healthy financial result. Sixth, it is the ever-rising airport
JET AIRWAYS: A CASE
STUDY
EXECUTIVE SUMMARY
Jet Airways saw a phenomenal rise from its humble beginnings when the Indian skies
opened up to private enterprise, In 1993 it started as an Air Taxi Operator with four leased
Boeing 737s and moved on to „scheduled airline status‟ at the beginning of 1995. By the early
2000s, the airline offered over 40 destinations in India and two destinations outside India,
operating over 1,900 flights weekly. The airline‟s fleet grew from four aircraft in 1993 to 42
aircraft comprising 34 Boeing 737s and eight ATR 72-500s. The airline would go on to buy 10
777s in 2005-06 just after purchasing 10 Airbus A330s to expand its long-haul international
flights. In fact, Jet Airways‟ long-haul operations took passengers as far away as Toronto, San
Francisco, London, Johannesburg, and Singapore, among many other global cities. A scene
reminiscent of Jet Airways‟ earlier years – the airline started with a small handful of 737s and
went on to include turboprops and then larger wide bodies. In 2010, Jet Airways became the
country‟s largest carrier by passenger volume, becoming a significant international airline. The
airline even flirted with joining the Star Alliance, a deal that never went through. Nevertheless,
the last few years have seen steady decline. The obvious reasons as seen by experts for the
decaying financial health of aviation sector companies are summarized in brief here. First is the
rising of fuel prices. Here, the airline company has no control, as airline turbine fuel (ATF) price
is controlled by oil exporting countries. Second, the depreciation in the value of the rupee adds to
the cost of imported ATF. Third, unsustainable competition in the domestic market is killing.
Airlines sometimes sell tickets at a loss to beat competition in the market and thus remain in
business by depending upon volume and market share. Fourth, it is the higher capacity addition
which works as a multiplier of the loss. There is a technical term, „aviation-seat-kilometer‟,
which is the base to measure loss or profit. If an aircraft has 100 seats and it flies to a destination
at 100 km, then 100x100=10,000 will be the aviation-seat-kilometer. Seat capacity has to be kept
at an optimum level so that there is profit. Fifth, there should be a symbiotic correlation between
these two important parameters for a healthy financial result. Sixth, it is the ever-rising airport
