I have been a loyal Jet Airways customer for the past couple of years. Unfortunately, that role made me a witness to their rapid descent from a premier airline into a confused brand, trying to be everything at the same time i.e. a full-service airline and a low-cost carrier. I believe that the downward spiral that the airline is currently bound in, is due to 4 major reasons. These should be a lesson for all entrepreneurs.
1. Alienating loyal customers
Analysts estimate that airlines’ Frequent Flyer programs generate almost 50% of their profits and keep them from losing customers to their competition. Jet Airways has tinkered with their JetPrivilege program far too many times by
- Reducing the value of the points
- Making it hard to redeem points
- Removing the perks provided to top-tier members
Many members (like myself) switched to other airlines and the exodus of loyal customers forced Jet Airways to offer deep discounts and increase promotional spends to attract new customers. This significantly inflated customer acquisition costs – something that burns deep holes in any balance sheet.
2. Destroying their USPs
Jet Airways consistently eliminated the USPs that made them the preferable choice over other LCCs and Air India. However, their ill-advised cost-cutting measures battered the benefits they offered over their competition. The meals became smaller, cheaper, and frankly disgusting. The baggage allowance was also reduced to 15 kgs which is the same amount offered by Indigo & Spice with no-frill fares. Once the comparisons with other LCCs started – Jet Airways’ brand was destroyed.
3. Participation in price wars
Someone in Jet Airways' boardroom decided that it was a prudent choice for the company to compete with the LCC’s on fares. In my opinion, that person should be the first one fired! Jet Airways had the opportunity (which Vistara is encroaching now) to provide comfort and luxury for frequent and business travellers whose needs are more than the bare minimum, for which they are willing to pay a premium. Instead of finding that niche and dominating it, Jet Airways pulled a Kingfisher by trying to provide maximum value at a minimum price. While the LCCs were optimizing the balance between price & value, Jet Airways’ value proposition was lopsided in favour of the customer. By reducing the benefits to correct the anomaly, Jet Airways’ led its customers astray. As history demonstrates, rarely has a brand ever made it out of that death spiral without aggressive structural changes (and an apology.)
4. Concentrating on market share vs share of market profit
In a price conscious and emerging market like India, I expect that the LCCs would command a lion’s share of the market because they make air travel accessible to a new traveller. Jet Airways, however, opens the customer’s eyes to the value-adds of a full-service carrier, therefore introducing them to a whole new class of flying. Therefore, as a full-service carrier, Jet should have positioned itself as a brand that provides more than just a metal tube from point A to point B. Their motto should have been:
You will learn to fly with the LCCs but enjoy flying with us.
Despite having some of the highest levels of talent on board, Jet Airways made some glaring mistakes. It is surprising that no one was able to prevent them, leading Jet Airways into this mighty fix.