What’s coming next week in Jet Airways cost rationalisation?

The past month has been a tumulous one for Jet Airways, and for all the other Indian carriers. First, news broke out about Jet Airways not having the money to survive beyond 60 days if the employees did not take a pay cut. That almost had the effect of a run on the carrier, which hasn’t recovered from that news yet. People have started to wonder if they are making the right choice flying Jet Airways now, and this is generally bad for business when people start questioning your stability. Well, I certainly have been booking them and flying them when I need to fly for sure.

Subsequently, came the news that the airline’s results were postponed, which makes people wonder if something was wrong in there or something was wrong. That is a six-sigma event to delay the results of a listed company, but I am not going to speculate on that at the moment because I don’t have any information that you guys don’t.  All I know is that as I write this, their third MAX is on its delivery flight, and that indicates to me the willingness to get out of this mess.

What I’m going to speculate on is how will Jet Airways react to this event, now that the airline will finally consider their results and a cost-cutting plan in the months ahead.  It is a long read, so get a coffee if you please. It’s Onam after all. Excuse me for being disorganised and shuffling back and forth on my thoughts. After all, I am but just an armchair analyst on this one. But I have seen many Jet Airways reshuffles happen over the years. Low Cost, Full Service, Cuts Again. Hmm!

It is expected that the airline will move the way of selling meals on their flights, as per many reports which flew thick and fast last week. That shouldn’t be surprising at all. I’ve long held the belief that the days of legacy airline models are over, and that there needs to be a move to newer business models. I’ve never managed to vocalise it here because I did not think it was important.

Hot Meals must go!

But in a carrier like Jet Airways, I’ve been tracking their food since 2011. And it has not been consistent for many years, because the food is the first thing to go on the chopping block when the airline feels the need. We’ve seen it before, and I guess we will see it again. Read this article for how food costs  on your airline go down,

When an airlines asks for this, we give them the option of replacing chocolate dessert that costs about Rs 30 with kheer that comes for about Rs 12. If an airline has already come to kheer and wants further cost, they start offering chocolates or biscuit packs costing Rs 5. Airlines tie up with the biscuit manufacturer and get a special price on bulk purchase.

In veg dishes, paneer (starting Rs 210 pr kg) makes way for cheaper potato; prawn (Rs 900 plus per kg), lamb (Rs 450 + per kg) and fish (Rs 250 plus per kg) and make way for cheaper chicken (Rs 190 plus per kg). The main meal box goes from three — dish-rice-daal to two items

Quality Hot Meals cost money. And Indian Air Catering Units can do quality meals. Look at SpiceJet, they have some of the best food in the Indian skies, and it is available for pre-order.

SpiceJet Food

The only carrier which has been building their differentiation on food has been Air Vistara, and they’ve been doing it consistently for the past three years. They’ve also now taken the lead on selling food on their flights, end of this month onwards with their Vistara Lite fares. Those ways, the airline is already setting itself up for success, offering it as an option, rather than as the only choice as they go along.

Vistara Meals

I’ve long believed that Jet Airways, given their inability to serve an elegant meal anymore, should have moved to buy-on-board model, at least for Economy fliers.

Jet Airways Snacks

Other airlines around the globe have done it. I was circumspect of why I was going to spend 5 pounds on a sandwich on British Airways‘ Economy flight last year, but boy it was good!

British Airways Sandwich

Now we can discuss how much is a reasonable price to ask for these meals, or who should still get them free; there are many models globally to check out. For instance, Jet Airways had killed the lounge access for the Deal fares long ago, why not kill the food as well, just like Vistara did with Vistara Lite. Implementing this on Jet Airways will be a whole different ball game though because their network crisscrosses the country and is not focussed on one city. So there is a logistical challenge.

On the other hand, American Airlines offers their frequent fliers (Executive Platinum) a free snack and beverage from their cart even if they don’t get a complimentary upgrade, which has become rare over a period as airlines have learnt how to monetise airport upgrades.

Frequent Fliers, you next?

What else can you cut away? I’m sure as hell the frequent fliers will get some heat in this round of rollbacks. One of the areas which are Jet Airways strong suit is their network, and their big frequent flier base, mostly flying corporate fliers around the country and abroad. With corporate policies going more stringent over the years, a lot of them are flying Economy. They depend on their frequent flier status to get them in the Lounge. And back in the day, Platinums could bring a guest to the Lounge; then they cut it in 2011, then they got it back again in 2015, then they reduce it again. What I am saying is… frequent fliers should feel the heat in this round of cost rationalisation. You already lost a lot of lounges.

Upgrades?

Jet Airways is already doing their best to monetise upgrades. Earlier, they used to sell upgrades at a fixed cost. Now, they do an Upgrade Auction as well. They also upsell Upgrades at the time of ticket bookings itself. FFP upgrades have moved down the list of priority, given they are gate upgrades rather than check-in upgrades now. Not the first time this has been down to them.

JPMiles Incentive for booking online?

Long, long time ago, Jet Airways would give you an extra incentive for checking in online, using JPMiles. Then it was gone. Could it be gone for booking online as well? It is just a matter of taking that bold step. Right now they do it hence the entire market does it. Jet Airways offers 250 JPMiles/Sector to buy direct, which used to be 500 JPMiles/Sector. Air India provides according to your class of service, and Vistara as well offers a fixed number for everyone who books direct.

ATRs must go

This is very well discussed in the press and has been cooking for a while. Jet Airways has been considering wet leasing their ATRs to TruJet, who needs more ATRs to expand and Jet Airways has 18 of them.

Fuel Efficiency

Fuel Efficiency on the narrowbody aircraft is anyhow going to rise with the MAX being progressively inducted. As we speak, a couple of more Boeing 737 MAX8 are on the FAL for Jet Airways. VT-JXC is on its way to Mumbai, and it is the third out of their 225 MAX commitment.

On their long-haul aircraft, the airline will do well enough to move ahead on the plan to remove those First Class Suites they don’t use and move towards the densification of the plane fast. I understand it is a bit of a buzz kill to be able to bring out the aircraft for a retrofit exercise since they are full right now and finally flying their right missions across the globe, but this is 10-15% of the plane space usually going empty. So, needs to be fixed.

In-flight Magazines Must change or go away too!

Have you noticed how expensive the Jet Airways magazine looks and feels? It is plush, and one thing that hasn’t changed over the years. But it is also dead weight in the aircraft. If the airline identifies with it, they can keep it, but print a smaller magazine and at a lighter quality paper? After all, it is just another amenity, and this is one I don’t think one many passenger care about much.

Those Premium Check-in Counters at Mumbai?

They cost money. While I do love to check in on the Pods area, perhaps that could be one way to leave some money on the table for the airline to let those pods go? Unless they are not paying differentially for these pods as compared to their other check-in areas.

Those Closed Gates at Delhi?

Apparently, at Delhi Airport you can take Closed Gates. This is how (perhaps) Jet Airways almost always gets their flights to arrive and depart from 37A or other gates, and Vistara gets the 40s. This is speculation, remember, and it could again be that they got it free of cost.

Ground Handling

A rumour I heard was about Jet Airways firing Ground Handling Staff. That is the knee-jerk response to cost-cutting. There is another way, not my thought, but from an aviation pro, about making a JV with someone like Swissport.

Bottomline

Those are some of the things that come to mind about how the cost rationalization of Jet Airways could go. I’m going to go out on one limb and predict you should at least see some of these changes come out over the coming months. I love the airline of course, and some things need to change to keep them afloat. What are those things is what I am listing out here. Jet Airways Cost is a huge thing, and they really need to chop some flab somewhere.

What do you think about what will happen at Jet Airways on Monday? I’m curious to see who agrees, disagrees, thinks other things could happen… 

About Ajay

Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe. Ajay is a frequent contributor and commentator on the media as well, including ET Now, BBC, CNBC TV18, NDTV, Conde Nast Traveller and many other outlets.

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Comments

  1. I disagree with few points.

    Booking on jet site, frequent flyers, etc.
    I am a mid level executive and try to push to book in jet, not because of their flight experience which while marginally better, not something which makes me go for it. Rather it’s the frequent flyers points and tier points which entices me.

    For someone who does not travel internationally as much, even these jpmiles are not super valuable as of now. Higher devaluation could infact backfire.

  2. Well Magazine point is a damn true point and it is surely a dead weight. In aviation industry we have seen reduction of carrying dead weight means a chance to increase paying weight. Their bag rationalisation and charging of extra bag is a good earning measure. Meal is an area where they should look into a learn from UK and SG of providing as option than a compulsion, Railways have done it now on some premium trains. An area which they can look is reducing excess space in J class as you rightly pointed out. I will recommend only 8 seats instead of 12 seats as a standard config in premiere and the rest to be economy. Premiere is earning but increased economy seats will easily cover up for loss of 4 seats in premiere.

    • Do the economy seats rarely fill up ? Where as in 737 all business class is always full . (Voucher , points upgrade), bidding, upgrade while booking / checkin. So 12 is good for Jet May be 8 is good for Air India & Vistara

  3. Jet has recently stopped extending validity of expired upgrade vouchers. Experienced yesterday at Delhi when I tried upgrading using a voucher that expired just 2 weeks back.

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