Posted by: Bruce Einhorn on September 8, 2009
In a country notorious for its lousy airlines, Jet Airways has always stood out as India’s one world-class carrier. Unlike some other Indian airlines, Jet has new planes, tasty food, a good safety record, nice service and a great reputation. (My former colleague, Manjeet Kripalani, posted on the Eye on Asia blog last year about how lovely it is to fly on Jet.) Ideally, all that attention to getting things right would translate into a profitable business for Jet. But the airline has been struggling, losing $97 million in the year ended March 2009 on sales of $2.3 billion. That was the second year in a row of losses for Jet.
Today Jet suffered through probably its worst day ever as pilots angry with management staged a strike that forced Jet to cancel 115 flights. According to this story in the Economic Times of India, “chaos prevailed” in airports as a result of the strike. Jet issued a statement saying it had been “in a conciliation process with the pilots” and the walkout therefore was against Indian law. The government, meanwhile, issued a statement in an attempt to assure Indians it was looking after their best interest. Jet executives have “been directed to put in place a full refund mechanism without any deduction - on passenger request,” the Civil Aviation Ministry said. “They have also been asked to adopt a method of combination/re-scheduling of flights for smooth transfer of passengers. The Ministry has directed the management to ensure full facilitation of passengers and their amenities. Jet Airways has been asked to minimize the inconvenience that is being caused to the traveling public.”
But pilots and passengers aren’t the only ones angry with Jet these days. On news of the pilots’ walkout, the company’s stock price briefly plunged but then recovered, thanks in part to news that Jet is looking at selling some of its planes. Still, anyone who invested in Jet at the time of its much-anticipated IPO in early 2005 is hurting. The stock debuted at 1100 rupees in March of that year but now trades at 259. During that same period, the benchmark Sensex index increased more than 230%.
Wednesday update: Jet Airways management has ratched up the dispute another notch, firing another three pilots in addition to the two it had already sacked in July for joining a new union representing Jet pilots. How determined is Jet to bust this new union? The Times of India quotes airline founder Naresh Goyal saying “I will not hesitate to close down the airline if the people who work for it no longer believe in its philosophy of discipline, guest care, safety and punctuality that has taken Jet where it is today.”