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The Greatest Advantage Jet Airways Still Possesses
As of now, while the macro-economic conditions and the Covid-impact make for a very challenging case, a revival cannot be completely ruled out. An airline that was once flying high, watches with baited breath.
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Jet Airways announced suspended operations more than a year ago on April 17, 2019. The last flight flown was from Amritsar to Mumbai at 10.30 pm. The suspension was inevitable given that the cash-flow had dried up. An airline that only three months earlier flew a fleet of 119 aircraft was down to flying a fleet of 5 aircraft. Yet, the 16,000+ employees at Jet Airways who had salaries pending in various degrees continued to show up to work till the last moment. This was a contradiction but also reflective of the culture of the airline. In the event that a successful bid emerges towards resurrecting the airline, this may be very well be the key to success.
A cadre of committed employees
Through all the trials and tribulations of Jet, while there were many changes in senior leadership, the folks on the frontlines and folks across back-offices remained fairly stable. Together they formed the foundation for the airline’s success. And the elements of that foundation remain intact.
In speaking to Jet Airways employees across functions, across cities and across levels three themes consistently emerge. First, that in spite of cutthroat competition and politics that was prevalent, at the end of the day Jet acted like one big family; second that folks were held to high standards but this was measured by outputs and not inputs; and third and perhaps most important, majority of employees that one speaks to say that were Jet to re-start they would return in a heartbeat.
The airline stood by its employees for the most part. For instance, even after the terrorist attacks of 9/11 it was one of the few that did not resort to layoffs. The older non-expatriate leaders are known to have engaged with folks from the shop floor to the cockpits. As one of them fondly recalls, “we were usually called to the 5th floor in Siroya center for meetings. The meetings were brutal, accountability was extremely high and you were expected to know your numbers cold. That we were well prepared would be an understatement. But after the meeting and getting held to high standards, you did not leave with a bad taste. Rather many a times we had dinner together and were pleasantly surprised that the leadership would ask about family and remember our previous conversation(s). This only furthered our commitment to Jet.”
A collegial culture that evolved over decades
The challenge with culture is that it takes an inordinate amount of focus and token items don’t suffice. With new workers joining the workforce with varying expectations, the culture has to be adapted accordingly. Interestingly, Jet was one of the few airlines that did get it right.
Jet did see employee turmoil in 2008 when it sacked 1900 employees. It was justified
as an attempt to adapt the business model and optimize costs. Arguably this was to deal with not only the low cost airline onslaught but also the advent of the global financial crisis. But the move soon turned out to be a PR disaster. To stem the fallout and public outcry, the 1900 employees were reinstated. But as the legendary investor Warren Buffett says, “It takes 20 years to build a reputation and five minutes to ruin it.” The reputation Jet had built was tarnished and this then led to the formation of a pilots union which is a story in its own right.
In spite of these hiccups, as a place to work, Jet continued to have a competitive but collegial atmosphere. Employees did leave but mostly it was them leavening the person they worked for and not the company. This also explains why several came back. Even when employees left out of their own will the exit interviews always indicated that if they ever choose to return to Jet the doors would be open. And many did. Amongst the employee pool it is fairly common to see folks with two and even three stints with Jet. The average tenure of the Jet Airways employee was 10+ years (keep in mind this is during a time when there was rapid hiring by the Middle East carriers and also the advent of the low-cost airlines in India all of who wanted talent from Jet Airways).
The ability to hit the ground running
Any potential bid for Jet is essentially built using the leverage of the owned aircraft including six Boeing 777. These aircraft were secured with an ExIm loan that has ~USD 13mn of outstanding payments. With a recent transaction approved by the National Company Law Tribunal that allows for the sale of office property owned by Jet Airways, it is assumed that the outstanding ExIm loan on these aircraft will be paid back making them unencumbered. Add to that a pool of landing and parking slots, and bilateral flying rights that were built over the years and have been “temporarily” assigned to other airlines, the 49% ownership stake in loyalty program, two separate AOCs, and the Jet brand. Together these make for the collateral pool that will go towards raising liquidity (even though the way forward with bilateral and slots is in question). Optimizing costs this time around won’t be a challenge as the airline is literally starting up. If it does continue with the outstanding Boeing order of 142 aircraft, the terms are likely to be very competitive. There are also structuring solutions that can be used but whether these are employed or not remains to be seen. Perhaps the greatest advantage that a new buyer for Jet has is that in the event that a bid comes through, a bidder has the ability to source talent with institutional knowledge; talent that will willingly return towards reviving the airline; a committed cadre of employees who have seen a trial by fire; and ironically a market-place change that minimizes the difference between business models.
As of now, while the macro-economic conditions and the Covid-impact make for a very challenging case, a revival cannot be completely ruled out. An airline that was once flying high, watches with baited breath. As the National Company Law Tribunal (NCLT) gets ready for a meeting next week to evaluate the bids for Jet Airways, several stakeholders are hoping that somehow the airline rises once again. Towards that, the greatest advantage that Jet Airways still possesses is its ex-employee base that is energized, eager and ready to return towards reviving the carrier.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.