Jet Airways present business-level strategy

 Jet Airways had been designed for a full service game – aircrafts with Business and
Economy classes, free meals for all passengers, large well trained and groomed teams to
ensure quality of service, frequent flier programs for customer retention and access to
airport lounges; these were the key attributes that it started with.
 With the advent of Indigo, Jet tried to hurriedly change its competitive strategy; by giving
a low-priced, no frills service as an answer. This entailed a drastic change in its offerings
and processes and resultant brand perception.
 A price war followed. Both airlines moved to dynamic pricing models where airfares
were decided by market demand at the given moment.
 With no qualitative perception difference left between the two airlines, flight timing,
pricing and service at airports became the deciders of which airlines’ tickets got
purchased.
 Indigo had designed its entire business based on its original competitive strategy of low
price, no frills service. It did not care to change anything to fight Jet Airways. So it’s
brand positioning remained consistent and got deeply entrenched in the consumers’
minds.
 Jet Airways, on the other hand, was reacting to Indigo’s entry and strategies. It’s brand
positioning kept altering rapidly. The core customer base was left confused and
disappointed with the rapid drop in service offerings.
 In trying to beat the new competitor, Jet moved away from a model it was designed for.
Clearly, it could not sustain this new model with its established cost structure and landed
up in severe profitability issues.
 Jet eventually reverted back to its original model, but too late in the day.

Company Differentiation
JetBlue Airways can obtain the differentiation advantage by analysing different value chain
activities. For instance, a company can procure the unique and valuable inputs that are not easily
available to competitors. JetBlue Airways can either reconfigure the whole value chain or change
individual entities to set the differentiation basis. The cost drivers (such as timing,
interrelationships, linkages, scaling and integration) can also be altered to develop uniqueness.

Some examples of differentiation through analysis of value chain are:

 Forward integration or backward integration to exercise better control over inputs

 Utilization of new channels of distribution
 Implementation of innovative process technologies.

5.1 Differentiation through primary value chain activities

JetBlue Airways can individually analyse the primary activities from all aspects and create
differentiation basis by identifying the following sources:
  Inbound logistics: possible differentiation basis for JetBlue Airways are:
o Procure high quality inputs to offer high quality finished product
o Effective incoming input handling to reduce damage
 Operations: possible differentiation basis for JetBlue Airways are:
o Flexible manufacturing system
o Wide product range
o Improved product appearance
o Prevention of product pre-mature failure
o Quick response to unique specifications
o Improved customer satisfaction through lower defect rate
o Improved product performance due to conformance to technical specifications
 Outbound logistics: possible differentiation basis for JetBlue Airways are:
o Effective handling and better shipping to reduce product damage
o Timely product delivery
o Flexible delivery capabilities
o Effective order processing procedure
 Marketing and sales: possible differentiation basis for JetBlue Airways are:
o Improved relationships with suppliers and customers
o Enhanced communication with customers by offering high quality information.
o Brand awareness, reputation and image development due to extensive and
effective advertising.
o Effective coordination among product, research and marketing departments.
o Wider sales force coverage.
 Services: possible differentiation basis for JetBlue Airways are:
o Superior service quality
o High quality technical assistance
o Reliable and quick repair/maintenance service

Is the present strategy working?

No the strategy didn’t work back then because jet airways have been almost stopped operating
and Jet Airways was teetering on the brink of collapse today, operating just five planes and
waiting for lenders to release emergency funds to keep the debt-saddled carrier flying.

Airfares on rival carriers have soared and Air France and KLM are operating additional flights to
Mumbai to accommodate passengers affected by Jet's decision to cancel international flights.As
the airline seeks an immediate injection of ₹400 crore to continue its few remaining services

Here are some financial data of the company-

Profitability-
Cost drivers of JetBlue Airways

JetBlue Airways can control following drivers to add value, set differentiation basis and enhance
efficiency.

 Organisational policies
 Integration
 Timing
 Economies of scale
 Linkages
 Interrelationships
 Capacity utilisation
 Learning and Spillover
Minimise Costly purchase

Many aviation experts believe the start of Jet's financial troubles can be traced back to the 2006
purchase of Air Sahara for $500 million in cash. Founder Naresh Goyal reportedly ignored the
advice of professional associates who said he was paying too much. Market reaction to the deal
was also decidedly mixed. The budget carrier was rebranded "JetLite" but it haemorrhaged
money and in 2015, Jet wrote off its entire investment. "The acquisition is still a millstone
around the company's neck," Devesh Agarwal, editor of the Bangalore Aviation website, told
AFP.

Budget airlines

India's aviation sector is fiercely competitive and Jet has taken a battering from a number of
hugely successful low-cost airlines, including IndiGo, SpiceJet and GoAir. Experts said the
people running Jet failed to take the trio seriously when they were founded between 2005 and
2006, offering cut-price fares and previously unserved routes. "They were essentially assumed to
be fringe players by the Jet management," industry analyst Amrit Pandurangi told AFP. "Jet
always catered to corporates and failed to recognise that low-cost carriers were attracting
customers who were price sensitive," he added.

Efficient management

Experts put a lot of the blame on Goyal's management style. They say his decision to have a
single management team, headed by himself, running all Jet's operations was a crucial mistake.
Analysts say he should have had one team running the full-service carrier and another running
the budget flyer. "Jet lacked a concrete business model and fiddled with it often, which confused
investors, (and) passengers alike," said Agarwal, who believes the company's decisions lacked
transparency. Goyal has also been accused of making bad investments and failing to address the
company's deteriorating financial predicament while borrowing heavily. "Simply put, they spent
more than they earned and kept accruing debts," added Agarwal.

Provision for Fluctuating crude

All of India's carriers are particularly sensitive to fluctuations in global crude prices because the
Asian giant is a major importer of oil. When the rupee is weak, which it has often been over the
past year or so, fuel -- the biggest cost burden for airlines -- becomes more expensive. Soaring
oil costs and the Indian rupee hitting record lows last year affected all Indian carriers. IndiGo and
SpiceJet reported massive losses but analysts say their books were resilient enough to weather
the quarterly losses. Jet's, however, were saddled with debts. "Jet Airways failed to manage its
balance sheets and was caught out by these cyclical changes in the industry," Mumbai-based
economist Ashutosh Datar told AFP.
Plan to attract investors

Aviation analysts say Goyal's failure to find a strategic investor to pump money into Jet extended
the airline's losses, contributing to the financial predicament it finds itself in today. Talks at the
end of last year with tea-to-steel conglomerate Tata failed to go anywhere, while Etihad Airways
reportedly refused to increase its stake because Goyal was at the helm. The 69-year-old was
forced to give up control of Jet last month as part of a debt resolution deal that saw a consortium
of lenders led by the State Bank of India take over the airline. It is now up to them to find a
buyer. If they don't then Jet is likely to become the first Indian airline to collapse since fugitive
tycoon Vijay Mallya's Kingfisher Airlines ceased operations in 2012.