Winning consumer confidence back key to Jet Airways reviving its brand image?
Jet Airways is going through a rough patch. We spoke to experts to find out how the brand's image has taken a hit and what can be done to salvage the situation
Last week, speculations were high that India’s second biggest airline by market share, Jet Airways, will shut its operations in two months because of a financial crisis. Media reports suggested that the company’s financial position is not robust and is facing difficulties in running the business.
Adding to the speculations was Jet’s quarterly results. The company reported a loss of Rs 1,040 crore in the fourth quarter of the fiscal 2018. Annually, the company posted a consolidated loss of Rs 634 crore compared to a net profit of Rs 1442 crore last year. The chairman of the airline, Naresh Goel, reportedly met stakeholders and pilots to discuss measures to revive the airline. The company reportedly requested the pilots to take a pay cut for two years. However, Jet Airways’ CEO Vinay Dube in an official statement later said that “the recent media reports about the sustainability of the airline are not only incorrect, but also malicious” and denied any conjecture of a stake sale.
Though the company might not accept the reports, it’s clear that the brand is going through a rough phase. There have been several reports of booking cancellations as well.
This brings one to an important question: How is the entire controversy affecting Jet’s brand image?
Experts say the fiasco may cause a dent to the brand’s image.
Saurabh Uboweja, CEO, Brands of Desire, believes that the effect on the brand’s image is highly adverse. “The effect is highly adverse. And that gets immediately reflected in their stock prices, which have seen major fluctuations in the recent time from an all-time high in Jan 2018 to a three-year low it is currently at,” he said.
“To top it up, passengers will be suspicious of Jet Airways' ability to service them effectively, specifically raising concerns around safety,” he added.
Talking about the damage control that the brand can do to salvage the situation, Uboweja said, “They have done some already by reversing their decision to cut pay by 25 per cent and clarifying their position around the 60-day survival rumour. However, the truth is that the airline is in a precarious situation due to a highly complex operational structure, legacy processes, a confused positioning and a top-heavy organization. Under such circumstances, they will first have to aim at winning back passenger confidence before they undergo any major reforms for ensuring long-term sustainability. But for that to happen, they need to have short-term funding to secure their immediate future.”
According to N Chandramouli, CEO, TRA Research, “It is unfortunate that the news had to break in the manner it did. To see a news item that says 'take a cut, or we shut down' shows desperation and it was not handled in the best manner. Since there are alternatives already being looked at, after refusal of the 25 per cent pay cut proposal, it is evident that all options had not been explored before making this statement.”
When asked about the measures that the brand can take to revive its image, Chandramouli said, “The airline business is not an easy one for sure. Only the low-cost airlines or the ones which have a sharp focus on costs, seem to be doing well right now. However, the way to bring the situation under control is to make quick negotiations and come to a path of cost control immediately. Once the path is clear, it must be communicated with equal force to bring back faith of those who have lost it.”
“For Jet to redeem itself, dramatic, quick and life-saving action needs to be taken. With rising fuel costs, the only other places to negotiate are salaries and lease agreements. More equity sale is also a route to redemption,” he added.
Brand strategist Nupur Krishna believes that if the rumours around the airline being grounded on account of failure to manage their economic coffers do come to pass, it shall be a further blow to an already ailing brand.
“Jet Airways has been in the news in the recent time for all wrong reasons, be it surpassing Air India for worst on-time performance and landing second best in terms of customer complaints or mounting debts and financial losses. All these factors stack up in undoing the efforts of Jet Airways team in building their brand," said Krishna.
“With Jet serving both ends of the price spectrum, the effect of a shutdown on passengers is going to be considerable. It would add to the airline’s notoriety for inconsistent performance and would send their business to the competitors. On the flip side, Indian economy flyers are extremely price sensitive and they will continue to choose the airline with the best deal. Even though Jet’s image may take a huge hit after the grounding, in the long run I think it won’t affect customer traffic adversely,” Krishna believes.
However the company is confident of a turnaround. A company spokesperson said the implementation of measures by the company will help them address all the current issues.
Jet Airways has the second-highest market share of 15.5 per cent amongst domestic carriers. Back in February 2015, the airline swung into (marginal) profitability after reporting losses for seven consecutive quarters. Then, it reported standalone revenue of Rs 6,055.15 crore during the March 2018 quarter, down from the Rs 6,271.21 crore it reported during the same period of the previous year.
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