A presentation detailing the rise and fall of India's most storied companies - The Jet Airways

1. Business & Communication Ethics
A Case Study On The Topic Of
ORGANISATION FAILURE

2. Composition of Interrelated Individual
An organisation is a composition or aggregation of
interrelated individuals
It is always treated a separate entity from other
elements in its environment
Features Of An Organisation
Common Objectives
An organisation is usually created for pursuing
common objectives.
Hence it has a well-defined structure to
facilitate achievement of these goals
Division of Work
Work in an organisation is always broken down
into different segments
Such segments are passed to different individuals
for better efficiency
Coordination
Coordination among groups is a basic trait of
an organisation
Coordination helps to avoid duplication and
delays

3. Co-operative Relationship
An organisation creates co-operative
relationship among various members
of the group
Such co-operative relations help increasing
the overall efficiency of an
organisation
Features Of An Organisation
Authority Responsibility
Relationship
Hierarchy within an organisation is of utmost
importance
Well-defined lines of communication is
required
Group Behaviour
Success in an organisation is directly proportional
to behaviour of people in the organisation
Performance
Organisation is greater than sum of its
parts
Specialisation in particular is useful in
increasing performance

4. Life Cycle of an Organisation

5. FAILURE OF A FEW
INDUSTRY GIANTS

6. Yahoo was founded by Jerry Yang and David Filo in
January 1994 and was one of the pioneers of the early
internet era during the 1990s.
In hindsight these mistakes can be considered as the
prime reasons for its failure:
● Refusing to buy Google for just $1 million
● Failing to buy Facebook
● Repeated instances of bad leadership
YAHOO

7. Gross value of Standard Oil was $1.4 Trillion.
Temporarily undercutting competitors to get them out of
the competition.
Using industrial monopoly, the company influenced
private contracts to increase profits.
Finally, after a widespread protest in public as well as
among government, the Standard Oil Trust was broken
into 40 independent companies by the Sherman Antitrust
Act of 1911.
● A certain limit of decency needs to be kept in
business.
● An organization particularly a market-leader needs
to ensure that there is a competitive environment for
doing business.
STANDARD OIL

8. IBM
The IBM of the 1980s was a computer hardware
company. Whether you needed a desktop computer for
your office or a mainframe big enough for every
employee in a Fortune 500 company to use, IBM has you
covered. They had all that and everything in between.
● IBM sold off its PC line in 2005 to Lenovo.
● IBM’s exploration into the
● IBM was greedy and wanted all of it. That backfired
badly.

9. Candidate for Study
Jet Airways

10. TAKEOFF
Company founder Naresh Goyal began his travel career in
1967 at the age of 18 as a general sales agent (GSA) for
Lebanese International Airlines. In May 1974, he formed his
own company, Jetair (Private) Limited, to market other
foreign airlines in India. Jetair eventually grew to a network of
60 branch offices.
After three and a half decades of monopoly by Air India and
Indian Airlines, the Indian government reopened the domestic
aviation market to private carriers in April 1989. Goyal setup
Jet Airways (India) Private Limited in 1991.

11. TAKEOFF
Jet Airways began domestic flight operations with four
new-generation Boeing 737s on May 5, 1993.
Jet was not the first private airline in the skies; that
distinction went to East West Airlines, which launched in
February 1992
The first flights were from Mumbai (Bombay) to Delhi and
Madras and ten other destinations.

12. TIMELINE OF EVENTS
1992
Open Skies policy was announced
in liberalizing rules and regulations
to open up the commercial civil
aviation market.
1992-1994
Birth of ModiLuft, Damania
Airways, Air Sahara, East-West
Airlines, Jet Airways.
1994
Within two years of its launch,
the number of passengers it
carried was more than 1.5
million.
14 January 1995
Jet Airways is granted scheduled airline
status.
1996
Jet Airways placed a $375
million order for four
737-400 and six 737-800
aircraft from Boeing

13. TAKEOFF
In 1997, the Cabinet Committee on Foreign Investment (CCFI) of the
Government of India announced that foreign airlines would no
longer be permitted to take an equity stake in joint ventures with
Indian aviation companies, reversing the Government's earlier
policy which had allowed carriers such as Gulf Air, Kuwait Airways
and Lufthansa to hold a maximum 40% equity stake in their joint
ventures with Indian partners.
In October 1997, as per this directive, Naresh Goyal took back
control of Trade Winds from its foreign investors.

14. TIMELINE OF EVENTS
1996 - 1997
Jet Airway broke the record
of 2.4 million passengers
flown.
1997-2000
Jet Airways had a market share of
20 percent, second highest after
state-owned Indian Airlines at
that time.
March 2004
The airline launched its first
international flight in from Chennai to
Colombo
28 December 2004
Jet Airways was listed on
the Bombay Stock
Exchange and became a
public.
April 2001
Jet Airways fleet had grown to
30 aircraft and was operating
over 195 flights daily to 37
destinations within India.

15. Domestic Passengers Carried by Jet Airways

16. PEAK

17. PEAK
In 2010 Jet Airways became the largest airline in India with a passenger share of 22.6%
It sought government approval to join Star Alliance in July 2012.
It bought Air Sahara -- merged routes -- launched low-cost carrier called “Jet Konnect”.
It sold off 26% of their firm to Etihad when the government allowed foreign airlines to
buy up to 49% of Indian local carriers.
Jet Airways had over 225 jets on order with Boeing as well as 10 Dreamliners.

18. Market Share of Indian Airlines

19. JET AIRWAYS : Key Strategies
Keep operations and growth in line with expected Indian economy growth which is
around 7%-8% per annum
Manage risk & short term crisis on account of any global financial risks
Manage short term spike in crude oil prices
Minimize passing the fuel price fluctuation to customers
Network expansion will be around the key focus specially Gulf and Middle East

20. Revenue of Indian Airline Firms

21. DOWNFALL

22. DOWNFALL
Their success was short lived
As passenger demand fell and Jet Airways’ business was encroached by newcomers
SpiceJet and IndiGo.
They were forced to start lowering their prices
The tickets incurred price drop to as low as 2 cents.
Network expansion will be around the key focus specially Gulf and Middle East
This was the beginning of the end for Jet Airways.
They pushed through their cash reserves and took on more debt to stay competitive

23. Market Share of Indian Airlines in 2016

24. TIMELINE OF EVENTS
October 2008-10
Jet Airways lays off 1,900 of its
employees, who were later
reinstated due to intervention from
the Ministry of Civil Aviation.
Incurs a loss of Rs.225 crores(2009)
and meagerly profits at
Rs.9.69crores(2010)
November 2011-13
Posts three consecutive net
losses standing at Rs.713.60
crores (2011),Rs.16 crores (2012),
Rs.60 crores (2013).
March 2016-17
Jet Airways reports a profit of Rs.1094 CR.
after almost 10 years.
Jet Airways reports a profit of Rs.1482 CR.
March 2014-15
Jet Airways reports a huge loss of
Rs.2945 CR
Jet Airways reports a loss of
Rs.1055 CR.
November 2011-13
Posts three consecutive
net losses standing at Rs.713.60
crores (2011),Rs.16 crores
(2012), Rs.60 crores (2013).

25. TIMELINE OF EVENTS
May 2018-August 2018
Jet’s merger with its subsidiary
Jet Lite, three years after the
proposal was made.
New check-in baggage norms
announced and considers a 25%
pay-cut for employees, but still
loses Rs1,323 crore.
March 2019-July 2019
Naresh and Anita Goyal step down
from the board of directors, being
unable to pay lease rental to
leasing companies.
The pilots threaten to strike.
April 2019
Undergoing insolvency
proceedings under Insolvency
and Bankruptcy Code, 2016
September 19 The income-tax department conducts surveys in the company’s Mumbai and Delhi office over
allegations of financial misappropriation.
September 20 Around 30 passengers on a Jet Airways flight from Mumbai to Jaipur suffered nose and ear bleeding
after the cabin crew forgets to activate the internal pressure control. India’s Civil Aviation Minister Suresh Prabhu
orders a safety audit of all airlines and airports.
ICRA downgrades the airline and the board approves the deal-making the lenders the largest shareholders

26. COSTLY PURCHASE
● Purchase of Air Sahara for $500 million in cash.
● Rebranding it as "Jet Lite"
● Ignoring advice of professional associates.
CONCLUSION
Budget airlines
● Underestimating low-cost carriers -- IndiGo, SpiceJet and GoAir
Poor management
● Goyal’s incompetence as a CEO.
● His acquisition of Air Sahara & refusal to curb day-to-day operations

27. Fluctuating crude
● Fluctuations in the global crude prices
● Fall of Indian rupee - - soaring fuel costs
● Failure to manage balance sheets
CONCLUSION
Failure to attract investors
● Mr. Goyal’s failure to find a strategic investor
● Tata’s refusal to buy Jet Airways & Etihad’s refusal to increase its stake as Mr. Goyal was
unwilling to cede control
● Leading to bankruptcy
Bankers
● Naresh Goyal alone cannot be held responsible for the failure of Jet Airways. The bankers
who supplied loans to Jet are just as responsible.
● On many occasions, Jet was given loans of far higher value than the collateral provided.

28. The Peter Principle
“An observation that the tendency in most organizational hierarchies, is
for every employee to rise in the hierarchy through promotion until they
reach a level of respective incompetence”

29. Laud Innovation
Innovators in the organisation need
to have a voice.
New ideas and directions should
be given appreciation
Transform Strategy
Go back to your drawing board
Change the way you work
Avoid Complacency
No one is too big to fail.
A market-leader needs to
consistently find the rising trends
in the market and align itself
accordingly.

30. Organisational Agility
Move according to the market.
An organisation must be able to let go of its pet
product and move out of their comfort zone.
Toxic Company Culture
This is a sure recipe for disaster.
Root it out of your company at the
earliest.
Balance Sheet
Always keep an eye on the balance sheet.
Do not borrow more than you can repay.
However do not let lack of funds keep you from investing in a new exciting venture.

31. THANK YOU