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karatecatman


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Fighting Jet lag
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http://www.business-standard.com/common/storypage.php?leftnm=lmnu5&subLeft=1&autono=100183&tab=r
Fighting Jet lag
 
Business Standard / New Delhi August 02, 2006
 
 
 
Almost everyone knows that the airline business does not yield great returns in competitive market conditions. Specific players in niche segments make good money, but the majority of airlines don’t. And so it is that Air Deccan is stretched and has seen share prices fall, and Indian Airlines avoids the red ink only because it has depreciated aircraft (thus reducing capital charges), while Jet Airways has reported a loss of Rs 45 crore in the last quarter. Fierce competition and rising fuel prices have resulted in higher cost per available seat kilometre, lower revenue per passenger kilometre and lower seat occupancy. But that was to be expected, and Jet’s market share could only go down with the launch of each new airline—almost all of them LCCs (low-cost carriers), while Jet remains an FSC (full-service carrier). The situation will become even more competitive as more new airlines join the race (like Indigo), and older ones add more aircraft to their fleet. 
 
Now, there are ways that an established airline with a creditable record can counter such threats. But what might prove more costly for Jet is to repair the damage caused by what looks like lack of foresight and a general lack of direction. To begin with, quality management time was spent on the Air Sahara deal, which eventually collapsed and has now ended up in the courts of law. This was a time when the airline’s managers should have been working out ways to counter the aggressive LCCs, which are desperate for more market share and have already made allocations for huge losses, at least for the initial years. Players like Kingfisher, Air Deccan, SpiceJet and GoAir have cashed in on the trunk routes, which used to be milked by Jet Airways for almost a decade in a duopolistic market. 
 
Experts think it would have helped Jet if it had acquired aircraft from the same stable, thereby reducing operating costs in a big way. Instead, a feeder route programme that uses turbo-prop aircraft (ATRs), a domestic jet fleet that is made up of Boeing 737s, and an international operation that uses medium-capacity long haulers from Airbus (A340 and now A330) mean money disappearing under avoidable accounts. A tie-up with a start-up to ensure healthy feeder route support and lease/purchase of aircraft from the Boeing stable for the (again, very competitive) international routes are moves that can help Jet in the medium term. What is worrying is the lack of a sound strategy to cement the leadership position in the domestic market - the airline offers heavy discounts to fend off competition and hence is not in any position to pass on increased costs to customers. 
 
Jet’s strength in such a market is its sterling brand equity amongst the frequent flying population, especially those from the business community, who tend to fly more often than others. With capacity outgrowing passenger traffic, Jet needs to work very hard to keep its core customers happy before staging a counter. With better synergy with Air Deccan, those vacant seats in Jet aircraft might just be filled up. Meanwhile, Jet can only hope that the consolidation game works in its favour—as and when the inevitable shakeout happens. The problem of course is that there is no shake-out visible on the horizon, even as most players keep expanding their fleet. 


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Nimish


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Whoa! Quite a hard hitting article against 9W. Certainly brings up some valid points, to that extent, they're doing the right thing in questioning 9W's lack of strategy.

9W's strenghts are

  • Their reputation for good service
  • Ontime performance
  • Huge legion of business travellers (who are no longer loyal though - due to corporate mandates to travel by the "cheapest" reliable mode - which could be IT or S2 or anything else - even DN for ATR sectors due to the great connectivity they provide).


9W's weaknesses are

  • Complete lack of management/due-diligence on the S2 mess they created for themselves. IT was not going to buy S2, so there was absolutely no need for 9W to buy S2 at that time.
  • Inability to sort out the US tangle
  • Inability to decide and join a global alliance and feed into the alliance hubs/code shares to kickstart their international plans and increase yields
  • Lack of clarity on route plans (they've already milked the UK thing for all it's worth, but seem to be concentrating all their eggs into that one basket)
  • Still very dependant on traditional distribution modes like Travel agents, paper tickets, not really tapping the Internet Low cost model etc.
  • Lack of good inflight comforts/features - basics like seat pitch, and then cool stuff like IFE, laptop power points etc.


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JumboJet


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Nimish wrote:

Whoa! Quite a hard hitting article against 9W. Certainly brings up some valid points, to that extent, they're doing the right thing in questioning 9W's lack of strategy. 9W's strenghts are
  • Their reputation for good service
  • Ontime performance
  • Huge legion of business travellers (who are no longer loyal though - due to corporate mandates to travel by the "cheapest" reliable mode - which could be IT or S2 or anything else - even DN for ATR sectors due to the great connectivity they provide).
9W's weaknesses are
  • Complete lack of management/due-diligence on the S2 mess they created for themselves. IT was not going to buy S2, so there was absolutely no need for 9W to buy S2 at that time.
  • Inability to sort out the US tangle
  • Inability to decide and join a global alliance and feed into the alliance hubs/code shares to kickstart their international plans and increase yields
  • Lack of clarity on route plans (they've already milked the UK thing for all it's worth, but seem to be concentrating all their eggs into that one basket)
  • Still very dependant on traditional distribution modes like Travel agents, paper tickets, not really tapping the Internet Low cost model etc.
  • Lack of good inflight comforts/features - basics like seat pitch, and then cool stuff like IFE, laptop power points etc.


I heard that they were going to take a decision by Mid August to join a global alliance.....any confirmations on that please

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Nimish


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I heard that they were going to take a decision by Mid August to join a global alliance.....any confirmations on that please

No - I have no idea at all. I hope they do decide on something soon!

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JumboJet


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Nimish wrote:

I heard that they were going to take a decision by Mid August to join a global alliance.....any confirmations on that please No - I have no idea at all. I hope they do decide on something soon!

I wonder these small tie ups they have chintu pintu airlines makes us feel what 9W is up to

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deaphen


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Jet lag?? just pop a melatonin!


:)


nitin



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the_380


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Best if its a short-haul flight then just fall asleep

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