COMPANY PROFILE

Jet Airways (India) Ltd.

REFERENCE CODE: 17C981D1-FFB2-4C30-8DBA-08AE8AB1F7DF

PUBLICATION DATE: 3 May 2012
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Jet Airways (India) Ltd.

TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4

Jet Airways (India) Ltd.

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Jet Airways (India) Ltd.

Company Overview

COMPANY OVERVIEW
Jet Airways (India) (Jet or the company) is a provider of air passenger transportation services. It
also provides cargo services to courier companies, the postal department of the Government of
India, international airlines, and financial institutions. The company operates flights for 76 destinations
including the US, Canada, the UAE, Singapore, Malaysia, and the UK.The company is headquartered
in Mumbai, India and employs about 13,177 people.
The company recorded revenues of INR147,269.8 million ($3,210.5 million) during the financial year
ended March 2011 (FY2011), an increase of 20.3% over FY2010.The operating profit of the company
was INR8,550.5 million ($186.4 million) during FY2011, as compared to the operating loss of
INR6,087.7 million in FY2010. The net loss was INR858.4 million ($18.7 million) in FY2011, as
compared to the net loss of INR4,201.8 million ($91.6 million) in FY2010.
* Interest and finance charges are not included for the calculation of operating profit.

KEY FACTS
Head Office

Jet Airways (India) Ltd.

Siroya Centre
Sahar Airport Road
Andheri (East)
Mumbai
Maharashtra 400 099
IND

Phone

91 22 6121 1000

Fax

91 22 6121 1950

Web Address

http://www.jetairways.com

Revenue / turnover 147,269.8

(INR Mn)
Financial Year End

March

Employees

13,177

Bombay Stock
Exchange Ticker

532617

National Stock
Exchange of India
Ticker

JETAIRWAYS

Jet Airways (India) Ltd.

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Jet Airways (India) Ltd.

SWOT Analysis

SWOT ANALYSIS
Jet Airways (India) (Jet or the company) is a provider of air passenger transportation services. It
also provides cargo services to courier companies, the postal department of the Government of
India, international airlines, and financial institutions. The company has a strong brand image and
brand recognition in both domestically and internationally. However, governments policies increase
the operating costs and impact the product differentiation of the company thus influencing its
profitability and brand image.
Strengths

Weaknesses

Strong brand recognition

Vertically integrated operations
Robust fleet base and strong network
portfolio

Tax dispute with Sahara Airlines

Opportunities

Threats

Positive outlook of the aviation industry in

India
Strategic network expansion
Growing global tourism industry

Government's new ground handling policy

may pose a threat to Jet
Intense competition in the aviation industry
Volatility in the aircraft fuel prices

Strengths

Strong brand recognition

Jet has a strong brand image in terms of its domestic operations. For example, in February 2012,
the company was declared the winner for Customer & Brand Loyalty in Domestic Commercial Airline
Sector at the 5th Loyalty Awards. During the same month, Jet bagged the favorite full-service airline
at the Outlook Traveller Awards 2011. Similarly, in January 2012, the company was adjudged the
best in aviation at the NDTV Profit Business Leadership Awards 2011. Furthermore, in December
2011, Jet was honored with the 'best domestic airline award for 2011 by the Travel Agents Association
of India (TAAI). The company was also adjudged the best airline in Central/South Asia and India
at the 8th annual Global Traveller Reader Survey Travel Awards in Beverly Hills, California, in
December 2011.
Such recognitions enhance the company's brand image and brand recognition among travelers,
which in turn adds to its topline growth.
Vertically integrated operations

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Jet Airways (India) Ltd.

SWOT Analysis

Jet offers integrated operations to its customers. It offers passenger operations, cargo operations
and also leases aircrafts. In the passenger segment, the company operates flights daily to 76
destinations connecting 24 international destinations and operates flights to and from 52 destinations
in India including New York (both JFK and Newark), Toronto, Brussels, London (Heathrow), Milan,
Johannesburg, Hong Kong, Singapore, Kuala Lumpur, Colombo, Bangkok, Kathmandu, Dhaka,
Kuwait, Bahrain, Muscat, Doha, Abu Dhabi, Dubai, Jeddah, Sharjah, Riyadh and Dammam.
Moreover, Jet also offers various other related services including: interactive voice response (IVR)
based payment and ticketing, city check-in, one time check-in on return journey and tele check-in.
Additionally, it offers services which include web check-in, kiosk check-in, same day return tele
check-in, check-in while walk-in, online reservation and booking and mobile ticketing, airport lounges,
facilities for the physically challenged, check-in facilities for overseas passengers and baggage
clearance services.
Further the company also transports cargo across the world. In FY2011, it transported 205,942
tonnes of cargo. In addition, the company also has leasing agreements of aircrafts with Thai Airways
among others. Thus, vertically integrated operations allow the company to cater to a wide range of
customer needs and conveniences, which in turn give a competitive edge over its competitors.
Robust fleet base and strong network portfolio
Jet has a strong operational portfolio with strong fleet base and network operations. It operates a
fleet of 101 aircraft, which includes 10 Boeing 777-300 ER aircrafts, 12 Airbus A330-200 aircraft, 59
next generation Boeing 737-700/800/900 aircraft and 20 modern ATR 72-500 Turboprop aircraft.
With an average age of 5.8 years, the airline has one of the youngest aircraft fleet in the world. With
the help of these aircrafts, the company operated 146,876 departures in FY2011, with an average
passenger load factor of 78.6%. Further, Jet's wholly-owned subsidiary, JetKonnect operates a fleet
of 17 aircraft, comprising Boeing 737 series. It covers 56 domestic destinations and one international
destination, Kathmandu, with 430 flights a day.
In addition, the company has a strong network base across the globe. It covers 24 international
destinations and operates flights to and from 52 destinations in India. It has codeshare agreements
with 11 airlines including Air Canada, All Nippon Airways, American Airlines, Brussels Airlines, Etihad
Airways, JetKonnect, Kenya Airways, Malaysia Airlines, Qantas, Thalys and United Airlines. Robust
operational facilities help to maintain a niche in the market and enable it to serve a wider range of
customers.

Weaknesses

Tax dispute with Sahara Airlines

Jet is a defendant in a tax dispute with Sahara Airlines from 2008. The company acquired 100% of
Sahara Airlines in 2007 and changed its name to Jet Lite (India). In 2008, the dispute between the

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Jet Airways (India) Ltd.

SWOT Analysis

two companies was set in motion by the Income Tax department (IT) which sought INR1.1 billion
($200 million) as tax liabilities from Jet on behalf of Sahara Airlines. In March 2009, the Sahara
Group accused Jet of default in the payment of the installment for acquisition of Sahara Airlines.
Though Sahara accused Jet of breaching a clause of the deal, which stipulates that the latter had
to pay the four installments, the purchase deal stipulated that in the event of breach of this clause,
the renegotiated price of INR14.5 billion ($0.3 billion) would stand revoked and Jet would have to
pay the originally agreed price of INR20 billion ($0.4 billion) for acquiring Sahara Airlines. Jet Airways
is now seeking reimbursement of the balance IT dues of INR8.2 billion ($0.17 billion) from Sahara,
and is also defending its decision to deduct a part of the IT dues from the purchase consideration.
Such disputes tend to increase the operating costs of the company which adversely influences its
profitability.

Opportunities

Positive outlook of the aviation industry in India

The Indian aviation market is providing positive growth opportunities for the company. The country
is the fastest growing civil aviation market in the world. According to the Directorate General of Civil
Aviation (DGCA), the Indian domestic traffic, in FY2011, increased by 21%, thereby expanding the
available air traffic market base of the country. The Indian economy is expected to continue to witness
a high GDP growth of 8% to 9% in the coming future. According to industry estimates, India is likely
to emerge as the third largest aviation market in the world by 2020 with about 420 million passengers
being handled by the Indian airport system against 140 million in 2010.
Jet holds a leadership position in the Indian aviation industry, with an estimated market share of
25.4% during the year ended March 31, 2011. Hence, a positive growth in the Indian aviation sector
increases the demand for the company's services which in turn augers well for the companys topline
growth.
Strategic network expansion
Jet is planning to expand its operational network in the coming years. In this context, the company
has started new flights to various domestic and international destinations in the recent past. For
instance, Jet introduced direct flights between Delhi and Dammam in the Kingdom of Saudi Arabia
four times a week, in March 2012. In November 2011, the company introduced new daily direct
flights between Mumbai Riyadh and Mumbai - Bangkok. Also during the same month, Jet introduced
an additional flight between Madurai and Bangalore/ Chennai. Additionally, in October 2011, the
company commenced daily flights from Thiruvananthapuram to Sharjah, aboard a Boeing 737-800
aircraft.
Such expansion helps Jet to increase its presence in the world and allows it to cater its customers
more efficiently.

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Jet Airways (India) Ltd.

SWOT Analysis

Growing global tourism industry

The tourism industry worldwide has witnessed a strong recovery since its downfall due to recession
in 2008. The recovery is primarily boosted by improved economic conditions worldwide. According
to the World Tourism Organization (UNWTO), following the recovery in 2010, international tourism
grew by about 5% in the first half of 2011. Between January and June of 2011, the total number of
arrivals reached 440 million, 19 million more than in the same period of 2010. Tourism in advanced
economies increased by 4.3%, reducing the gap with emerging economies (4.8%), which have been
driving international tourism growth in recent years. Europe witnessed a 6% increase in tourist
arrivals. International tourist arrivals into Northern Europe increased by 7%, and Central and Eastern
Europe by 9%, and travel to destinations in Southern and Mediterranean Europe increased by 7%.
Furthermore, according to International Air Transport Association (IATA), by 2014 there will be 3.3
billion air travelers. China is expected to be the biggest contributor of new travelers. Of the 800
million new travelers expected in 2014, 360 million will travel on Asia Pacific routes and of those
214 million will be associated with China (181 million domestic and 33 million international). The US
will remain the largest single country market for domestic passengers (671 million) and international
passengers (215 million).
With the anticipated growth, business and consumer confidence has picked up. This growth in world
tourism industry will enhance airline business. Thus, a growing end market auger well for Jet as it
is well positioned to capitalize on the growing global tourism industry.

Threats

Government's new ground handling policy may pose a threat to Jet

For security reasons, the Government of India took over the ground handling operations from the
airlines in India and passed a resolution regarding the same in January 2011. The aviation ministry
and aviation regulator Directorate General of Civil Aviation (DGCA) wanted the function to be handed
over to specialized companies to streamline operations and reduce security risks. DGCA, through
a circular issued in June 2010, prohibited airlines from providing ground-handling services where
there is no passenger interface, citing security reasons. Following this, only national carrier, Air India
and the airport operator (such as Airports Authority of India, GMR and GVK) would render ground
handling services.
The size of the ground handling business in India is estimated at about INR20 billion ($0.4 billion)
a year and airlines expects that the new policy would increase their costs, resulting in around 3,000
people losing their jobs and leaving little room for any brand differentiation. Such policies increase
the operating costs and impact the product differentiation of the company thus influencing its
profitability and brand image.
Intense competition in the aviation industry

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Jet Airways (India) Ltd.

SWOT Analysis

The competition in the airline industry has been intensified with the emergence of low cost carriers
in the East Asian region. The low fare charged by these budget airlines makes Jet's airline operation
less competitive. In the long-haul market, the company faces competition from local operators in
most geographical areas, including Middle East and Asia. In the medium-haul market, low-cost
carriers have established strong market positions and continue to grow. Further, as a result of
increasing business travel, a number of customers are increasingly looking towards air travel options
which allow them to minimize stoppage time at airports caused due to various reasons, including
baggage handling and refueling. This has led an increasing number of business organizations to
invest in private jets, which are jointly owned along with certain airlines, or completely owned. The
growing number of low cost and low fare airlines and the increasing number of private jets could
impact Jet's domestic market share.
Volatility in the aircraft fuel prices
Jet fuel forms the main raw material used in the airline industry. The demand for petroleum and
related products has historically been cyclical and sensitive to the availability and prices of oil and
related feedstock. Historically, international prices of crude oil and refined products have fluctuated
widely due to many factors that were beyond the control of companies like Jet. The cost of jet fuel
formed a significant part of the total expenses for the company. For instance, the total aircraft fuel
costs for the company in FY2011 stood at INR51,673.4 million ($1,126.5 million), representing 35.1%
of the total revenues. Hence, with an increase in the jet fuel prices, the operating costs of the company
also increases which can have an adverse impact on the total revenues and profitability.
Moreover, the global jet fuel prices have seen a considerable increase over the past few years. For
instance, in December 2011, the jet fuel price recorded $124.2 per barrel, as compared to $112.9
per barrel in January 2011. Furthermore, the political turmoil in the Middle East has raised the oil
prices. As the jet fuel prices account for a major portion of the operational expenses, the situation
would result in a reversal of fortune for global airlines with more losses in the current year.
Hence, a drastic change in the prices of the fuel can have a serious impact on Jet's expenses which
may in turn impact its profitability and margins.

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