Airlines in India have really been taken on the downward spiral, for their own reasons. But the common thread of going down for all of them was having to offer low fares which did not even cover the cost of fuel. Everyone in the Indian aviation market blamed Air India for the predatory pricing, where they were keeping ticket prices really low, and hence everyone else had to follow suit to be competitive.The US Dollar/Indian Rupee moving 20% in the USD’s favour did not help them either, because all of a sudden, fuel costs, unhedged for all of them most of the time, were up 20%.
Jet Airways, the classiest and best Indian airline for domestic travel for long, and my preferred carrier internationally, has been on a series of cost cutting measures for a while now. They are not in the best of shape due to the adverse economy for airlines in India. As a result, the top management seems to have tried every subtle trick in the book for a while to generate additional revenue or reduce costs. They went about reducing the meal service, downgraded the benefits of the JetPrivilege program and significantly restructured lounge access privileges from 1st January 2012. Considering I have been an unofficial ambassador of the airline for a while, promoting them to my overseas colleagues for their blow your mind attention to detail and service, I feel sad and defenseless for all the changes being made to the airline. They’ve also adopted advertising tactics now.
I was still digesting all these moves, and I’d say the airline is in its right to switch gears (to the loathing of its frequent flyers and other passengers). But now seems the bank accounts are drying up a bit more than expected. According to news reports, Jet Airways has not paid out salaries to its employees for December 2011, and will do so in a phased manner in the first fortnight of January 2012, with the senior managers, pilots and engineers to get their salaries by 15th January 2012.
I hope this is a temporary phenomenon and here is hoping they are all taken good care of. It’ll be disappointing to see my favourite airline (still!) go downhill.
- Birdwatch: Photo # 4 (Jet Airways in Nokia Lumia colors)
- Jet Airways cuts lounges across India w.e.f. Jan 1, 2012
- Jet Airways follows the Olive theory, axes the meal service bit-by-bit
- Kingfisher Airlines a prime case for shutdown: DGCA
- A comprehensive update on Kingfisher Airlines route network due to withdrawal from 12 cities
Is there any airline in India doing okay these days?
I was following the Indian airline industry a bit more closely when I was traveling to India four times in two years several years ago, and it seemed a bit like a bubble that wasn’t going to be sustainable.
I dont know if I can take sides with Air Deccan (now Kingfisher) to have launched the low fare strategy or not. I won’t have been so frequently flying if they did not bring down prices in the market by at least 50-60 percent. Having said that, Indigo seems to be doing profitable. Sale and Leasebacks are the low hanging fruit for them. But yes, an ontime operation with a professional crew indicates there is more contributing to their profitability than just sale/leasebacks. We’ll have to wait till they go public, if they do, for looking at the balancesheet though!