BL Research Bureau:
When the going gets tough, the tough get going.
So, what did the country’s largest airline Jet Airways do to beat the severe blues in the aviation sector last fiscal? A lot, says its annual report for 2011-12.
Forced to battle on multiple fronts – high cost of fuel and infrastructure, depreciating rupee, elevated interest rates, economic slowdown, overcapacity in the domestic market and phew! fares which did not keep pace – the airline battened the hatches and undertook stringent cost control measures.
Cost cutting
It struck off loss-making routes and redeployed aircraft to more profitable routes. It renegotiated contracts with vendors, pruned agent commissions, and reduced headcount.
Also, the company’s interest expenses decreased 13 per cent in 2012, thanks to conversion of working capital loans from rupees to forex denomination, and also due to some loan repayments. On the income front, the airline increased ancillary revenues.
It also resorted to sale-and-lease back of some of its aircraft and engines to aid cash flows.
Besides, it sold the development rights of its leasehold property at Bandra-Kurla Complex in Mumbai to raise funds. The results showed.
While passenger income grew 19 per cent in 2012, the airlines’ revenue from excess baggage increased 63 per cent and its non-operating revenue grew 83 per cent.
branding
On the marketing and branding side, Jet Airways consolidated its low fare offerings – JetLite and Jet Airways Konnect – under the JetKonnect brand to enhance brand recall.
Low fare capacity accounted for 64 per cent of the airlines’ domestic seats in 2012, up from 59 per cent in 2011.
The airline seems to have placed its bet on the fortune, lying at the bottom of the pyramid, especially during difficult economic times.
JetKonnect is India’s largest low fare brand, says the annual report.
Now, that’s quite something for an airline which began as and is still often categorised as a full-service network carrier.
social media
Adapt and survive seems to be the guiding principle. Besides, Jet Airways latched on to the social media bandwagon to increase “customer touch points”.
The airline had 568,324 Facebook fans and 12,650 followers on Twitter as on March 2012
http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3878695.ece
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