Reasons behind the collapse of Jet Airways & lessons that must be learnt | ep 145
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- เผยแพร่เมื่อ 17 เม.ย. 2019
- #CuttheClutter #JetAirways
In this episode of Cut the Clutter, Shekhar Gupta takes a look at the collapse of Jet Airways and the lessons to be learnt from it
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Some of the comments are more sensible than Mr Gupta's analysis!! 😂😂🤣
I agree totally. Unfortunately that is what happens when you gain popularity.
Hey good one even I am reading the comments problem with Gupta is the fellow thinks he knows it all and that only he is right fellow is crippled by an under capacity brain and a over capacity ego heeee
lol
*Love when you talk about business stories.*
Shekhar Gupta is an expert in everything !
Next CEO of Tata Ltd
Greetings from Singapore. When Lee Kuan Yew first traveled on Jet Airways, his first remark was , ` they have got one of our chaps`. I do hope Jet Airways will prevail the current tsunami.
His generosity showered on you can be seen through your reporting....
JetAirways one of the best air ways they treat the passengers nice most of the time I prefer to fly in this I hope it will raise again and fly we stand by u r side always
Sir, all your points are very valid. Except that you’ve let off Naresh Goyal very lightly. He has a far bigger role to play in the capitulation of Jet than what you’ve described. You’re being a little benevolent to your friend.
I flew on JetA in 1995 for the first time and 2019 March for the last time. Now I'm glad I choosed JetA for that journey. They were always bringing good value in their pricing scale for me. This is a great loss for the entire aviation field. I'm still surprised that a company which has more than 3 billion USD revenue had to shutdown like this. I think there r many other reasons which r not surfaced yet. 😓😓
For Goyal, its simply what goes around, comes around.
With due respect, sir, ultimately it's just a matter of supply and demand. Barriers to entry in the aviation business are low. Airline stocks have been terrible investments all over the world except for one or two low cost airlines (Southwest in the US, RyanAir in Europe). You need to be a low cost operator because ultimately customers go for the cheapest priced offer. Jet Airways were too bloated in terms of cost and have not got the scale compared to an IndiGo (not that Indigo shares have been a home run either). This is just capitalism at work. No need for tears to be shed. Jet Airways were simply not good enough.
All the other reasons: government taxes, regulation etc etc...these are industry wide issues. Higher taxes would just be passed onto the consumer in any reasonable industry with pricing power. If government reduced their taxes, Indigo would cut their prices on day 1 and Jet Airways would be back in a pickle.
What's your take on Spicejet stocks? I have been an investor in Spicejet for almost 2 years now. It almost doubled last year, but I am a long-term investor so I didn't withdraw. Now it's still not in red for me, but they have come down significantly. I bought it mainly because of its CEO Ajay Singh as he is a great manager and he literally turned around Spicejet. I would appreciate your opinion/feedback on this. Thank you!
+1 for the tax cut point
Wrong. Jet airways just borrowed too much.
Look at the USA. United, Delta, American airlines are still making a profit.
I think u dnt know the story of emirates
I just bought an air ticket and recently learnt that airline ticket prices are taxed at 28%. That is absurdly high taxation. Why do we need such high tax rate. Govt has to get out of this mentality that it is a luxury purchase.
Karma for Praful patel giving away profitable international air india routes to Jet Ethiaad
I flew Often from Jet Airways from Delhi to Bangalore and trust it was a treat and feast.. I remeber how excited I was always to look forward to the trip!
Jet airways failed primarily due to : 1. Naresh Goyal and family just couldn’t let professionals run it like a professional company. They ran empty first class, fewer seats on wide bodied jets, etc. CEO and COO told them repeatedly but no avail on Naresh Goyal’s ear. 2. Not stepping back: Jet could have been saved if Naresh Goyal had stepped back much earlier as desired by Delta, SBI or Tata. He was becoming toxic for the continued operations but he didn’t budge till it was too late. That the reason Etihad didn’t bail it out this time. The author is too close to Naresh Goyal to see his faults and decided to make a video.
I fly to Bangladesh, often went with Jetairways, always happy with their service. I am also in shocked. Really unfortunate news.
Dhaka to Delhi?
It is far cheaper to fly via Calcutta.
I do work for an airline I have to say the point you raise about AAI is damn right for those who fly and yet don't know whenever you board your aircraft via aerobridge aai charges more than 75k per bridge per flight per gate ( some airlines use dual boarding gate )
Whenever the aai employees travels they always wants the cream seat rathe the high revenue seat for free of cost ....... Or else airlines have to face lots of problems from them. This is just a glimpse ......
Thanks a lot to explain these things.
Sudden? Spectacular? We've been following this story for more than TWO years!!!
Dear X IE.. You are spot on which you know & many of know, surprisingly you omitted ruling politicians who could have resolved the issue which I am sure you are like many of us are aware. To take your own example, in spite of many of the issues where you opined on NDTV discussions, related to earlier regime did not come true. Jet Airways has many opportunities to soar high, many houses eating on lock stock barrel & what regime with regulations come, all depends on people of India but one thing certain, your kind also some how responsible for fate of many such sudden deaths of businesses, always seem to dialling a wrong number.
Superb explanation of the aviation industry in India n the part the government played in demolishing private airlines through heavy taxation treating it as a luxury service.
Hope n wish Jet Airways get a buyer soon n the employees salaries must be settled at the earliest to take care of their children!
Karnataka pls pronounce the 'a' its not Karnatak...Its like calling you Gupt and not Gupta...
Mithun Kartha 😎😎😎😆😆😆
Gutp jee ko Gupt rog hai sayad.
Busting with 😂
😂
abe bhsodike hindi mein karnatak hi bolte h
It's a wonderful scrutiny. It makes a lot of sense.
Was expecting more from a person like you. The video would have made sense with some hard numbers. Looks more like a rant anybody can give opinion like this. You talk about everything.
Finally a very good analysis of the Jet Airways debacle
I have never been in a Flight...And don't know when will I fly in a Plane ✈️✈️??
Will any aviation companies survive till then?
Bhai jio airlines a rha h very soon...Will be too affordable by the time😂
@@rohitb405 🤣🤣🤣
😂😂😂😂😆good one
Main reason, Naresh Goyal bought Air Sahara in high price around 500 million dollar and that too in cash and this decision become noose around Jet Airways
And the on-and-off services being provided by the airways to its customers befuddled the minds of the passengers who, there by, preferred to travel with Jet's competitors because at least they were clear about what they were offering.
a very good analysis of airline industry in India
Good one.
A very good Cut the Clutter Mr.Gupta 👍🏻
Civil Aviation sector in India is indeed in a very poor shape!
He is not talking about the corruption, money from PRaful Patel, Dawood Ibrahim that has now stopped.
Sir,
Firstly let me thank you for the sober way of presenting the facts in all your videos.
In Jet Airways case though, I agree to all your facts, but I think the most important point was missed. Policy conditions are equally bad for all companies, but it was the market response that didn't gave a proper feedback to the owners of Jet & Kingfisher that caused their demise. Why the market didnt give proper feedback? Because the major lenders/banks lent money without proper equity infusion from promoters and without proper valuation of the business. This led to risk being borne more by banks and less by shareholders. Had banks come out straight highlighting the facts rather than lend out of proportion, the sharemarket too would have given proper response during and after those big acquisitions. Thus, the question is why the banks failed in something so basic in business evaluation. Look at the major banks involved, the gov't stake in those banks and the picture becomes clear. Unless we reform the gate keepers of economy, ie banks, such issues will keep happening and market will react only after default not before it.
However, this video was one of the best concise analysis of jet issue I came across.
Regards,
Rupak Laskar
True. I agree.
The govt should not support any private companies when it fails. It is a business just like buying your own property. If you not pay the mortgage, the bank will take your property.
Insightful thoughts sir
good analysis
In the circumstances, the Indigo story is inspirational. They are doing a few right things.
Pleasant surprise. Sir, u r expert on airlines business. TV channels shud call u rather than specialused Analysts. Good analysis overall sir.
And finance minister
I feel Mr Gupta really escaped from the real topics
I always doubted about ability of Goya’s and thought him to be a just front man for some bigger force political and/or plus. Airlines are complex and competitive businesses and have caused severe losses to many airlines worldwide. India have added problems of scarce & expensive capital and regulations.
Ashok Singhal
! Presumably you meant Goyal when you typed Goya (the Spanish painter painting a picture of Saturn devouring his sons to preserve his throne). How symbolic !
Good content
Did u do any detailed study before publishing this ?
That's one heck of a sales pitch for Jet airways sir at the beginning . Do we , average consumers of news not deserve "unvarnished" stories ?
Don't know why the media keeps repeating that it is india's finest airline. When was this ? May be till 2005 ...before completion arrived. In 2018, if you wanted to travel then Indigo is the best choice if you want to arrive on time and without cancellations. SpiceJet is your best choice if you want to fly at low fares. And for premium experience you have to take Vistara. From 2007 - 2012, Kingfisher offered the best in class service. From 2012 onwards even Air India was premium to Jet Airways. They were worst in all the segments. It's the worst or weakest which lose the race
They are my favourite mannnn.... God plss help this airline
It was about September 2018. I was leaving Delhi for Kathmandu via Jet Airlines. I was in conversation with a chinese business woman who did not speak india and english. We discussed a bit about her pharmaceutical business. Being seated in the back bench, we did not hear the announcement of entry. The chinese lady left for toilet and i was with her baggage. The staff asked me to leave her and get in the flight. I couldn’t leave the poor chinese lady alone and asked the staff to wait for a minute only. We then had verbal discussions. Then he ordered another staff to shut the gate and we were left behind. It was a matter of one minute only. I was on medication, and cursed the poor staff who dis not allow us to be on the flight. I hope it is possible to take back my bad words. I feel bad for the staff now. May god give the staff some relief in a harsh situation.
Well done sir.
80% off the time, hefty acquisitions kills even a booming company.
The biggest reason due to poor management.
When flying high,too arrogant.
When grounded, protesting to the government to bail them out.
Private company no government money
Mr.SG has pointed out all common to all reasons...Mr.NG and management has a big role to play in making the airline and ruining it too. Other conditions are equally applicable to all. No doubt JA is one of the best airlines in India. Of course taxes on fuel and tickets is a very valid point.
Great Mr Shekhar Guptha You know everything on this earth. Can you tell us something about Ex Congress presidents background and about the educational qualification of the present president ? And also something about how so many politicians became multimillionaires in a short term?
Your points on excessive regulation are well taken. You do mention lobbying in the sector, however, I wonder if you have any comments on Swaminathan Anklesaria Aiyar's OpEd piece in ET arguing that Jet actually collapsed actually because of competition and reduced cronyism... in an ironically kind of opposite way to your argument, although of course your and his points aren't mutually exclusive.
If such hefty taxes are not levied. How will the Government fund its bloated bureaucracy and welfare schemes.
AMARJIT TALUKDAR exactly how will they make themselves an fake champion who care for poors! Even poors don’t want subsidies they want jobs and better help in to secure a better standard of life
Well said
amarjit talukdar do you think that the tax you are paying, that are being used wisely, it is meaningless to spend 3600cr taxpayers money in making statues,
yup and some of that tax is also what is feeding Gupta
@@DRjax-nu8ul Yes you are right every where i go i see god dame Nehru family statues.
Why he bought Sahara at such high price is simply baffling.
Why didn’t you advise all these earlier itself, of improving infrastructure,reducing taxes etc.,etc.,when your friendly government was in power for 10 years ?
They were busy building statues it seems
Thanks Mr Shekhar Gupta for updating us on the subject
Ashwini Lohani, if said everybody is getting rich except airlines than he does not know the business. It's the Government which is getting rich and richer because of multiple taxation for Airline Industry and huge taxation on fuels.
Ashwini should understand that its not the ATF which is taxed highest, it is the petrol which is taxed 15% higher then petrol. If Petrol in Bombay is Rs 80 / litre, the ATF is Rs 67 per litre. Ashwini perhaps has never checked that domestic business class Load factor for Air India is hardly 30% and for Economy class it is 60% to 70% on an annual basis. How come Indigo has a load factor of about 90% to 95%. Costliest fuel today is petrol and 70% of Petrol is used by Scooter owners in India and not by Private Jet Flyers.
On Railway's It's unfortunate that 70% of Premium Trains like Rajdhani, Doronto etc Run at 30% capacity because of 70% reservation of Seats (HQ Quota, Tatkal, Super Tatkal and Dynamic Fare Rules) which makes tickets Wait Listed at very beginning & Dynamic fare makes tickets 50% costlier to Air in 2 Tier AC Rajdhani Trains.
On International Sector Air India is the costliest Airlines to book and majority of times 30% seats go vacant. AI 101 keeps 12 Business Class seats reserved for the staff to sleep.
Ashwini has to manage the competition. if Indigo sales a ticket between Delhi-Mumbai for Rs 3000/00. No body will buy Air india Ticket for Rs 4500 per seat. Accordingly 30% to 405 seats in Air india go vacant. Ashwini should travel Y Class quietly to understand the Air India or even Railways.
I hope Sekhar you understand this.
Jet airways was a great beneficiary of the opaqueness of routes entitlement, a benefactor in a minster in the previous government. Like many business houses in IndiaJet Airways collapse was created by the promoters and a few of his cronies who have siphoned of all the money and are sitting on a pretty pile. I don't want this government to bail out this airline with the tax payers money and the airline should closed down.
As usual a crisp and concise talk! By the way, just realised that cut the clutter is a one take video, must say, this is highly commendable !
disses bullet train for capital intensiveness. tells us to build more airports as if building airports is free.
It’s not only about jet airways. Most of the businesses are running into losses, most of the people are earning lower incomes than the average level of income and that is majorly due to big companies exploiting markets and lowering prices. We think that lower prices are good for us but we don’t know the after impact and how it leads to unemployment and other major problems
This is what happens when a company doesn't know how to manage it's finances. The last time when I traveled in an early morning flight in the "Jet Airways" I found the services disappointingly very shabby. They placed empty small coffee cups on our trays and then quite surprisingly after ten minutes, without a word of apology from the grim faced stewardess, she removed the empty cups without pouring any coffee or tea.It might ostensibly appear quite trifle, but small things do matter and goes a long way to create an impression. If such shabby services are repeated it does finally frustrates the passengers. Indeed their services were tardy and the tickets too expensive. No wonder they are unable to face stiff competition from no frill air carrier such as the "Indigo". One of the problems with Indian companies is that they all want to adopt short cut to success by winning over the confidence and goodwill of the passengers in the initial stage and then they spend heavily on publicity and expansion compromising on quality. They spread their resources thin that puts quite a strain on the kind of quality of service offered to the high profile clients who fly with them. Gradually the empathy that the airline had been enjoying over the years from its loyal customers and client, soon gives way to apathy for lack of integrity and thereby they lose on customer/ client loyalty because of their regressive services that had over the years nose dived because the management at the top went about on a cost cutting spree,that sadly had a dominoes effect on the overall health of the airlines holistically . This is the beginning of the downfall and finally one fine morning they make news headline, that the airline had gone bust and the employees find themselves unemployed and without the salary to sustain them in these trying days. That's how these airlines such as the Jet, after serving 25 long years lose altitude for lack of financial buoyancy to keep the aircraft fleet in the air. No wonder such companies begin to make drastic changes through cost cutting measures compromising on quality. There is misappropriation of funds through diversion, such as investing ion reality or shares instead of ploughing back profits in their airlines to improve upon the quality.
Very sensible......hope this govt ....takes aviation india seriously....about all.this shut down.....its high time.....
Very interesting video. Airports and planes are not good for the environment. They should promote competition between the bullet trains and the flights, like how Japan does, and thus, the Japanese carriers do so well in terms of profit and have great customer service.
Gupta ji can you present the views of all stake holders like dgca, government, owner, customer, of Airline industry in your next episode
I agree on all your points. No doubt the situation in India is not conducive for any business let alone airline which is capital intensive. However i would have loved this if you have spoken the same for Kingfisher and Dr. Mallya. Any business which is a part of development of the Economy and infrastructure should e protected and regulated later. In this way, the witch hunt on Dr. Mallya is completely unacceptable
Reminds me of how the Brokers removed the Nawab of Oudh, Wajid Ali Shah, and Siraj-ud-Daula.
The biggest impediment in creation of new airport and runways is lack of uninhabited land caused by high population density, especially in big cities like Delhi and Mumbai.
I Pray Ratan Tata to take over Jet-Airways and save No.1 Indian air line !!
"SHEKHAR GUPT" reporting from "KARNATAK"!
Good one. Exactly my thoughts - is it so hard to say Karnataka.
@@newbiekhyber! Northerners never ever learn to say "KARNATAKA" or "KERALA". It is a disease that is incurable in them (even Cancer can be cured). And they shout from the housetops about National integration & emotional integration, being incapable of observing the basic norms of languages, which aren't foreign but very much "Indian". Shame on such national leaders & their followers.
It's always Sambur never saambaar :)
@@deepakvsrinivasan! Sambur or saambaar which is correct (as Tamizh people say)?
There are better things to discuss.
I agree on the "everybody is getting rich, except the airlines" part. I have thought that too. Its sad that the chaiwalla operating outside the airport is getting rich, but airlines are bankrupting left and right...
1. Loaded Regulation 2. Under-capacity 3. High Govt Taxation. Jet Airways 1. Poor leadership 2. Bad Acquisition
What else is new. So what advice goes to family owned business - think entrepreneur. But, if you aspire to expand, think management. Let go of your ego and trust others.
The service standards are not higher than any of the airlines you mentioned. You can do a quick search for trip reviews on TH-cam and see the difference.
yes, a good analysis
but how will Jet overcome the situation
you nailed it Sir...very rightly presented
Majorly Indians Leaders are not thinking about Indian real growth. Almost 80% of leaders thinking and working for theirs own growths in the name of India. Now a days these trends are changing to My country and my India first, if it goes at least above 60% of Leader then for sure india will Grow and make sustainable profit in all Sector. Jai hind.
Sir u said well
Corporates should consult with media also
Not many people would know this but I believe karma is catching up with Naresh Goyal.
He did terrible things to the owner of an erstwhile airlines (East West Airlines), Thakiyudeen Wahid.
Read a book called A feast of Vultures by Josy Joseph.
One person’s karma shouldn’t decide the future of thousands who are working in jet and millions who are travelling in it.
@@vivektripathi2612 Travelers will have other options to choose. But the employees its tough for a period of time till they land up in a another job.
Kay Pandian There is a thing called availability of choice, market competition, demand and supply and resultant rise and fall in prices.
In other words, Airfare in India increased by around 30% due to this jet airways collapse.
@@vivektripathi2612 Thats a temporary one. It will get down in a week or two. As I said earlier buyers will always have other choice to make based on the budget they have.
Kay Pandian In a week or two? You are not adequately informed about this issue.
The effect on price has been there since more than a couple of months and now its effect will be more for God knows how many months.
Where there are more carriers in market-> more supplies-> more competition-> price goes down->
Since there are not much carrier in Indian market, even downing of one leads to going up of prices which is happening right now.
Ache din came for jet airways
I m not sure if we should blame taxation for demise of Jet Airways because taxes are same for all airlines
Did you analyse the air traffic??
Sir what you have said is known before you start a business... as you know mr goyal well... you should have shared what people don't know...
true
Thanks Shekhar. Excellent insight
I still miss the vibes if rails
but price is too much for ling distance
Heard Shekar Gupta's speech. Mostly I agree, crisply articulated but didn't touch 1). How NG went pillar to post to stop the Tata's to enter in the business 2). Why he was more expensive than others even in international routes, which didn't make sense at all and 3) sorry to say he was behaving like a don instead of a professional.
Jet Airways is a Premium Airline. Govt should Save it & Help Jet Airways definitely........forgetting the Past.
Flying in India is a very costly affair. There is charge for every thing. Even if you just drop the passengers, you are forced to pay parking at a premium rate. Then there is charge for Airport and the ticket itself is costly compared to bus.
I suggest Shekhar ji, you please read 'A Feast of Vultures" by Josey Joseph .... probably you will stop calling Naresh Goel a friend of yours. (and by the way, its just a matter of time when Naresh Goel will be declared absconding from India. Wait for a few weeks.)
Jet Airways had the WORST customer service among all airlines I have ever been on. I lodged complaints, nothing happened. I was a Silver Member and stopped traveling with them. I went to FB and posted on their page, they deleted it. I have had three occasions where I had altercations with Jet employees and I have since had only one tiff with SouthWest in the US. NEVER have I ever seen so bad customer service. It got what it deserved.
If the costs are high keep the ticket prices high, the airlines are unable to do that due to competition, and immature business plans. If taxes are lowered and parking charges at airports come down they will again go the same route of getting into unsustainable low ticket prices to gain volume. I think this is evolution where slowly maturity shall come into the industry. .
How come u know everything?🤔 From aviation to cricket to satellite image study to politics . There is a thing called " subject expert ". You comment on every subject. Itna talent kaha se sirji?🤔🤔
He has a team which specializes in researching the topic of the day. And Shekhar Gupta is a seasoned journalist! He knows his stuff
In the last few years they just sold tickets saying that they were a premium airline. The flights were always delayed or cancelled. Double standard were followed for business and economy. Flying in economy class was no better than a LCC. They offered no snacks for short flights. Even in long flight they offered the worst meals such as cold sandwiches. The cabins looked shabby. The inflight mags shared between seats. Inflight entertainment was not present or not serviceable. Some major incidents became common due to low safety standards. Only one thing they did was paid promotion to hide the harsh ground realities. There are few vlogs out here which are hosted by the same channel which show a worst Jet experience the followed by a paid Jet experience
Hey, I work n live in Saudi Arabia, now Saudi policy of Saudition caused loss of thousands of jobs of expats...... they are not on streets begging for jobs n not asking Indian government to bail out..... many of them reorganizing their professions, as matter of fact their approach towards life for survival.
KarnatakA not carnatak. Please!
Over Glamourous Job Profile + WTF Salary + Luxurious Seminars with Zero Resolution + Only Fairest of People as Employees + Unnecessary Foreign trips by Management Guys + Govt's Day Dreaming = Jet + Kingfisher
Jewar won’t be very good as too far from Delhi and local travel would be time consuming and painful. May be building simple and small airport near Delhi to cater domestic services . Fetish for grand thing must be controlled.
Indians consumers mostly run behind cheapest available alternative, we don't need and value facilities that comes with high cost. So with much cheaper available alternatives, collapse was foreseeable. About tax & cost, competition of jet airways was with its other airline rivals, and same cost& tax others has to pay, so it doesn't make any big cause for this collapse.
Your points are valid... if SpiceJet, IndiGo Airlines weren't also Indian carriers that actually make money.
You have sidestepped, that Jet Airways' demise was entirely its own fault, with several poor business decisions undertaken that ultimately sealed its fate.
Firstly, impatience with Star Alliance. Why go the whole horde of building infrastructure and rapport with Star Alliance, only to opt out because Jet had to wait a few months longer? Jet Airways' ascendency into Star Alliance duration would have been in line with the alliance. But nooooo... Couldn't wait, now or never. So, all the efforts, gone to waste.
Second, Etihad Airways. What was it about Etihad that had Jet Airways select Etihad over Qatar or Emirates? Why did it require Etihad Airways in the first place? Just look at Vistara: they partner with very obvious airlines whose hubs also coincide with high India demand, British Ariways in London, and Japan Airlines in Tokyo. Was AUH demand high? Let's not count labor workers. 9W failed to understand that it and EY had the same function.
Third, too ambitious with aircraft.
Fourth, confused identity. First, they were a premium airline. Then, they pull out the frills WHILE still charging high fares. No, that's not how you do it.
Sure country needs reform in Aviation sector
My first flight experience was jet airways .
Same here so I genuinely feel sad
Say "Karnataka"
Carnatac is a form of classical music, Not a state.
Yes! Every single time this guy says 'karnatak'.
Karnatak is hindi for karnataka
@@Thoughtflux No, you can not change name of a person or a place w.r.t. language. It's Karnataka only.
It's 'Karnatak' in Marathi too. Karnataka sounds something like Rama, Krishna, etc. i.e. anglicized versions of Indian local names. But thanks anyway for the info.
It’s gov mistake to give lot of low cost airline. In USA there are very few airline run and in India there are 5 to 7 different airline operating. Gov should bail out to save the economy.