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Jet Airways Crisis Explained. Rise and Fall of Jet Airways.

             Recently we saw the fall of jet airways. For this many people lost their income source. And beside this we saw that many employees of jet airways resigned from their job. Here all the details of jet airways (from rise to fall of jet airways) are explained very clearly. And also you will understand why (the number one airlines of india) jet airways is officiallly closed their operations?

Jet Airways Crisis Explained.

             Before start jet airways, its founder worked as a general sales agent in Lebaneae Airlines for seven years. After this he opened his own travel agency where he did sales and marketing of foreign airlines. Later in 1992 government launched OPEN SKY policy that describes any private agency can enter in aviation sector. And jet airways is one of them who took the benefits of the policy. In this way jet airways started its operation in 1993. Then Indian Airlines and Air India was the two biggest airlines in india. After launch jet airways started to grow rapidly. And between 1996-97 jet airways became the india's second largest airlines company in india. And jet airways continued their growth. In 2002 jet airways became the india's biggest airlines company. Gradually other private companies like Air Decan, Indigo, Spicejet entered in aviation sector after 2003. 


              Mainly there are two types of airlines companies like LCC(Low Cost Carrier) and FSC(Full Service Carrier). Low cost carrier doesn't provide any special service. For this low cost carrier gives ticket on low fare. On the other hand full service carrier provides special services. For this their ticket price become very high. So when lost cost carrier like air decan,indigo,airasia,jet airways came to airline market from then the problems of full sevice carrier starts. After coming to the aviation sectot low cost carrier started to attract the customers. As we know we,indian are very sensitive in price case. And it is the main reason for what low cost carriers rapidly grew in those industry. Its direct effect had to face full service carriers. To solve this problem jet airways acquired AIR SAHARA in 2007 and kept it as low cost carrier. Then jet airways had the services of both.

          In 2005 jet airways brought their IPO. And then price of jet airways's one share was 1100 rupees and market capitalization was 11200 crore rupees. After ipo jet airways never touched the ipo price. Jet airways bought aircrafts with the help of money that they raised in ipo. And they bought air sahara by rest of money. And after that they had to face cash crunch because to compete with low cost carrier jet airways decreased their ticket price. It means they gave full service but for the extra competition they provided the services in low cost. And its direct effect fell on their proft and loss statement. Gradually their profit and cash was decreasing. 

             For this they tried to find an investor who could invest in jet airways so that jet airways could run their operation. ETIHAD AIRWAYS invested 380 million dollar in 2013. Amid this Indigo started to attract many passengers. They started to offer low ticket price in their working model. For this many passengers started to prefer air travel. So indigo's share price began to expand. In 2015 indigo became india's largest airline. On the other hand market share of full service carrier decreased for low cost service carrier. In 2012 kingfisher closed their operation and market share of jet airways also decreased. For this pressure they had to reduc their ticket price and they faced loss. Then jet airways had already loan amount of 8-10 thousand crore rupees and the loss also created extra pressure on jet airways. As a result company started to face difficulties to repay the loan to bank. Let's see the big mistakes of jet airways for what they had to face difficulties.
Rise and fall of Jet airways.


             In 2004 government launched 5/20 rule. The rule says that the airline company that was working at least 5 years in airline industry and have 20 aircrafts can start international flights operation. After it jet airways started its international flights service. And they focused on international flights so much that they could not see their domestic flights. Jet airways thought that they became india's largest domestic airline. So they could now focused on international flights. As soon as they moved their focus from domestic airline low cost carrier increased their market share. To solve the low cost carrier problem kingfisher bought air decan and jet airways bought air sahara. But the plan of two airlines became totally fail. Jet airways spent their most money tobuy air sahara and some white body planes. After it jet airways faced troubles to expand their business. In 2008 they bought white body planes. In this way they focused on service not but in ticket price. The company didn't get any response of thus plan. 

           And then they started to give white body plane in lease. They leased about 70-80 planes in lease. Then they focused on lease. And they diverted from their main business. And the another mistake was that only founder of jet airways managed the whole business. He alone managed the plans and took decisions. Company had ceo but he was ceo in name. All the plans were made by founder of jet airways. We saw that last some years he couldn't crack the deal in good way. Delta airlines,tata sons,ethiad airlines and at last banks wanted to invest in jet aurways. But founder of jet airways couldn't crack the deal. At the last moment everyone wanted that he left his position from board. And when all the games ended then he left his position. Ceo of jet airways wanted to make the company better. But he had no power to make any changes in company. So company faced huge loss about 3000 crore rupees. And upon this they had about 10,000+ crore rupees losses.

          The combination of debt and losses is very danergerous for any company. So if any company falls in it then most of cases their business will end. In 2009 founder of jet airways was india's 75th ricchest person in india and then his net worth was about 700 million dollar. As we know company's share price depended on company's performance in long term. Jet Airways ipo price never touched its ipo price. For this shareholders of jet airways faced huge loss. 

          If you have any query related to jet airways please comment below so that the topic can be covered.

Best wishes to invest.


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