The Strategic Planning For Jet Airways

The Strategic Planning For Jet Airways The purpose of this paper is to evaluate a successful and well-organized strategic planning for airline industry providing Jet Airways strategic plan. Jet Airways is the Indias market leader in airline industries, however has faced increasing competition over the last decade resulting attrition in their market share. The report begins by analysing the current internal and external environment of Jet Airways. Through strategic evaluation its recommended that Jet airways focus on their fundamental service delivery to restore their competitive advantage within the industry. This will require putting into practice a combination of two strategies; a people processes strategy and a strategy focused on technological advancement. The people processes strategy was derived from a number of industry sources outlining Jet Airways decline in customer satisfaction. The technological advancement strategy coincides with the renewal of Jet Airways aircraft fleet and will further improve the overall customer experience. INDEX Objectives: The main objective of this paper is to develop the internal and external environmental analysis and strategic planning with risk management and business ethics. Specific objectives are following, Evaluate the current strategic position of Jet Airways. Examine the strategic Planning Models for Jet Airways. Examine Jet Airways internal and external environment. (1.0) Overview of Jet Airways: Jet Airways is an airline based in Mumbai, India. It is Indias third largest airline after Air India and Kingfisher Airlines. It operates over 400 daily flights to 64 destinations worldwide. Its primary base is Mumbais Chhatrapati Shivaji International Airport with secondary hubs at Bangalore, Brussels, Chennai, Delhi, Hyderabad, Kolkata and Pune as focus cities. In July 2008, Which? magazine ranked Jet Airways as the worlds best long- haul airline after Singapore Airlines. In a poll conducted by SmartTravelAsia.com in September 2008, it was voted as the worlds seventh best airline overall. It has also won an award for the quality of its catering. In February 2009, Jet Airways had 846,000 passengers, making it the second largest airline in India behind Kingfisher Airlines. Jet Airways also operates two low-cost airlines, namely Jet Lite (formerly Air Sahara) and Jet Airways Connect. (1.1.1) Corporate Structure: Mr. Naresh Goyal Chairman Mr. Ali Ghandour Director Mr. Nikos Kardassis Chief Executive Officer Mr. Saroj K. Datta Executive Director Mr. Abdulrahman Albusaidy Group Executive Officer Mr. Sudheer Raghavan Chief Commercial Officer Capt. Hameed Ali Chief Operating Officer Mrs. Anita Goyal | Executive Vice President Network Planning Revenue Management Mr. Raja Segran | Sr. Vice President Mr. P. K. Sinha | Regional Vice President Mr. Gaurang Shetty | Sr. Vice President Customer Services Alliances Capt. Hassan Al-Mousawi | Sr. Vice President-Operations On Time Performance Mr. Abdulkhaliq Saeed | Sr. Vice President Engineering Maintenance Mr. Mahalingam Shivkumar | Sr. Vice President, Finance Mr. Rajesh Sharma | Vice President Internal Audit Mr. K. G. Vishwanath | Vice President Commercial Strategy and Investor Relations Dato K. Jeyakanthan | Sr. Vice President Engineering Services Mr. Jay Shelat | Vice President Cargo Mr. Raj Sivakumar | Vice President Network Planning, Revenue Management Distribution Dr. Samar B. Srivastava | Vice President Human Resources Mr. Ashok Barimar | General Counsel Vice President Legal Ms. Ragini Chopra | Vice President Corporate Communication and Public Relations Ms. Monica Chopra | Company Secretary Sr. General Manager Legal (2.0) Environmental Analysis: For success within the airline industry, an awareness of the external environment is essential. This section aims to highlight the position of the industry, in particular looking at competitors and assessing Jet airways capability to meet current and future challenges. (2.1) PESTEL Analysis Of Jet Airways: Political Issue License issue for international operation. Infrastructural constraint. ATF price policy. Open sky policy. FDI Limits: 100% Greenfield airport 74% existing airports. 100% through special permission. 49% for airlines. Economic Effects The income level is rising. Contribution to the Indian economy. There is a rise in the cost of fuel. Investment in the sector of aviation. The growth of the middle income group family affects the aviation sector. Reduced fare but yet not enough. Social Effects Developing of the cities to better services and airports. Employment opportunities. Safety regulations. The status symbol attached to a plane travel. Technological Effects Modernization of aircrafts. The growth of e-commerce and e-ticketing. Satellite based navigation system. Modernisation and privatisation of the airports. Modern technology like CAT3 and ILS. Environmental Sector There is an increase in the global warming. The sudden change and the unexpected behaviour of the climate and to depend on the atmosphere. Shortage of the infrastructural capacity. There is a tourism saturation. Legal Factors. FDI limits. Bilateral treaties. Airlines acquisitions and the leasing cost. (2.2) SWOT Analysis Of Jet Airways: Figure 2.2 shows SWOT Analysis: S Market driver. Experience exceeding 14 year. Only private airline with international operation . They have a strong brand value and their reputation is very high in the mind of the customers. The service quality is good. Largest fleet size. There is a continuous innovation in their business. W Loosing domestic market share . Old fleet with average age around 4.79 years. Scope for improvement in in-flight service. High ticket pricing. Facing a tough competition from the competitors. O Untapped air cargo market . Scope in international service and tourism. The non penetrated domestic market. T Strong competitors. Fuel price hike. Overseas market competition. Infrastructure issues. Tourism saturation. Economic slowdown. Promotion and sponsorship declining. (3.0) Strategic Planning Model: (3.1) Porters Five Forces Model Of Jet Airways: (1) The threat of the entry of new competitors: The threat of the new entrants is very high for Jet Airways, because right now there are so many new airline company that has come with new strategies and services. The more profitable the industry is the more attractive it will be to new competitors. And as we know that Jet Airways is a very well known airline company of India since many years and it has a brand image and has a good reputation on the customers mind but then also Jet Airways has to give the best service quality to the customers to remain the market leader in the business. (2) The intensity of the competitive rivalry: The intensity of the competitive rivalry is high for Jet Airways. Jet Airways has many competitive rivals like Kingfisher Airlines, British Airways, Air India, Virgin Atlantic, etc. Jet Airways has both long haul flights and short haul flights. They are losing the domestic share market so in this competitive industry they have to bring some innovation in their business. Their strategy is very powerful because they are concentrating more in the service quality. Their aircrafts are modernised and they have the modernised technology like CAT3 and ILS. (3) The threat of substitute products or services: The threat of substitute for Jet Airways is low. There are few substitutes for Jet Airways: For short haul flights they have: Jet Connect and Jet Lite. For long haul flights they have: No notable substitute. (4) The bargaining power of customers (buyers): The bargaining power of buyer is medium. Jet Airways has the option to switch the suppliers and according to that the customers of Jet Airways also has the option to switch. (5) The bargaining power of suppliers: The bargaining power of supplier is high. The supplier can switch to any other option at any time. (4.0) Managing Risk: Every business faces risks that could present threats to its success. Risk is defined as the probability of an event and its consequences. Risk management is the practice of using processes, methods and tools for managing these risks. Risk management focuses on identifying what could go wrong, evaluating which risks should be dealt with and implementing strategies to deal with those risks. Businesses that have identified the risks will be better prepared and have a more cost-effective way of dealing with them. The types of risk your business faces strategic, for example a competitor coming on to the market. compliance, for example responding to the introduction of new health and safety legislation. financial, for example non-payment by a customer or increased interest charges on a business loan. operational, for example the breakdown or theft of key equipment. (4.1) Managing Risk Of Jet Airways: Jet Airways falls in the strategic risk and the operational risk. Strategic and Operational Risk: Overview of cyber-security and best practices in fraud prevention. Understanding key fundamentals of PCI Data Security Standards and what airlines need to do to align with the necessary requirements. Risk management in Jet Airways: Fraud prevention strategies and processes. Strategies in IVR risk control. The way forward in risk management. (5.0) Strategy and Ethics of JET AIRWAYS: Strategy of Jet Airways: The main strategy of Jet Airways is to maintain service quality. Jet Airways (India) Ltd. has earned the distinction of receiving the IATA Operational Safety Audit (IOSA) Registration. The airline has successfully completed the Operational Safety Audit and has entered into the IOSA Registry. One of the strategies that Jet Airways is following: Jet Airways strategy: removing a row to gain passenger space Mumbai: After having removed a row of seats from some of its planes to increase overall leg room for passengers, Jet Airways (India) Ltd is using an innovative, three-dimensional billboard campaign to sell the concept. Developed by Mudra Groups outdoor unit Primesite, the Mumbai billboards have images of two chairs sitting close to each other, and then one drifting on railings to reveal the message: Weve removed a row to give you more space. The row of seats has been done away with in Jets 737-800s series planes. Removal of rows to create space for cramped passengers isnt a new idea as many airlines, especially in the US, have used similar tactics and messages to differentiate their planes from rivals. Several other companies, such as auto makers (with sections of cars) and even coffee companies (Bru used chairs and tables) have used three-dimensional billboards to stand out. Says Gaurang Shetty, vice- president, marketing, Jet Airways: We wanted to create an impact and effectively communicate that we have removed a row of seats from our domestic flights, thereby giving more space on our domestic flights. The outdoor innovation has only been done in Mumbai considering the restrictions on the same in other metros. We would be communicating through hoardings in Delhi, Chennai, Kolkata and Bangalore. Sanjeev Hajela, president, Primesite, says the campaign has a budget of Rs55-60 lakh. Jet is a large user of outdoor media and is believed to spend as much as Rs10-Rs12 crore a year, some 20% of the airlines marketing spend. Jet Airways was one of the early entrants in the aviation business, as also the first private airline to fly to overseas destinations and had a relatively simple creative message: Jet Flies to 44 Domestic and 8 International Destinations. Notes Jagdeep Kapoor, managing director of Samsika Marketing Consultants Pvt. Ltd: Earlier, the positioning of the Jet brand was such that it reflected aspirational value. It was an aspired brand while all the rest were tired and perspired brands. Today its different. They have found a competitor in their own league in form of Kingfisher. There is a switch taking place, with some customers shifting loyalties to Kingfisher. He classifies Jets growth in terms of three Ss: Sustenance, Service and the need to (Speed Up). In spite of not being the first entrant in the aviation space, the Jet brand grew steadily, sustained and survived. Later on, Jet grew to be the best premium brand in the whole country by highlighting the service aspect. In service, they were unparalleled and premium. Today, its different and Jet needs to speed up. They need to aggressively build themselves as a brand, and advertise themselves like a consumer brand if they need to beat Kingfisher. 2) Ethics of Jet Airways: The Code of Business Conduct and Ethics (Code) has been adopted by Jet Airways (India) Limited to comply with applicable law and the rules and regulations of the Stock Exchanges on which the securities of the Company are listed. (6.0) Strategic and Operational Conflict: Strategic Planning: Long term. Affect widely. Generic. Org. People and other org. People. Operational Planning: Short term. Narrow/limited scope. Detailed. Within orgs. People. Strategic v Operational Conflict: Jet Airways has some strategic v operational conflict and they are: Jet Airways (India) Ltd.s three- day conflict with its pilots is costing the nations second- largest airline passengers and may hamper plans to raise $400 million to buy new planes. The last thing investors want to see when the airlines trying to raise funds is a crisis like this, Kapil Kaul, chief executive officer of the Indian unit of Centre for Asia Pacific Aviation, an industry adviser said yesterday. This is a wildfire and they need to put out as soon as possible. Alternate Arrangements: Jet Airways is endeavouring to make alternate arrangements on other airlines wherever possible and our airport teams will assist its guests to the fullest extent, Jet Air said. (7.0) Recommendations: As a result, we can say that Jet Airways is following different types of environmental analysis and strategic planning models to run their organization and their main strategy is to give service quality to the customer. So from this, we have conclude that Jet Airways is focusing on the services which they are giving to the customers to gain their loyalty and trust and to become the worlds no.1 airline industry. Due to lack of primary research we cant access more information about the company. References: Online links: http://www.jetairways.com/EN/GB/AboutUs/QualityCertification.aspx, contains the strategy of Jet Airways. http://www.jetairways.com/EN/KE/AboutUs/CodeOfConduct.aspx, contains The Code of Conduct. http://www.scribd.com/doc/8718529/Jet-Airways, it contains SWOT analysis and PEST analysis of Jet Airways. http://www.livemint.com/2007/11/25233107/Jet-Airways-strategy-removing.html