Analyzing Critical Management Issues: Jet Airways' Failure

This report provides a comprehensive analysis of the critical management issues that led to the downfall of Jet Airways (India). It examines the company's history, its initial success, and the factors that contributed to its eventual bankruptcy. The report delves into the leadership styles, financial mismanagement, and external market pressures that impacted the airline. It highlights the role of poor communication, lack of transparency, and ineffective decision-making in the organization's decline. The report also explores the impact of competition, rising fuel costs, and the depreciation of the Indian Rupee. Furthermore, the report offers recommendations for improvement, emphasizing the need for effective leadership, transparent communication, employee involvement, and sound financial management to prevent similar failures in the future. The report underscores the importance of ethical considerations and the role of managers in navigating a dynamic business environment.

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CRITICAL ISSUES IN MANAGEMENT
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Executive summary
The purpose of this report is to identify and critically analyze the contemporary issues and
challenges faced by the chosen business organization Jet Airways (India). The report
identifies the issues faced by the business and its potential weakness which ultimately led to
the failure of the business organization. Further, it critically analyzes the areas where the
business lacked efficiency and managerial competencies which led to the downfall of the
business organization. It analyzes the role of the managers and the leaders in dynamic
business environment and evaluates values, ethics and integrity in the organization.
Moreover, it provides recommendations and suggestions to improve the situation and the
possible solutions which can save the business from downfall.

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Table of Contents
Introduction................................................................................................................................3
Discussion and analysis..............................................................................................................3
Conclusion..................................................................................................................................6
Recommendations and suggestions ...........................................................................................7
References................................................................................................................................10

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Introduction
Jet Airways (India) Ltd. was founded in the year 1992 and commenced its operations
in the year 1993. It is a bankrupt and grounded airlines company based in Mumbai, India.
The airlines business organization was one of the best reputed private airlines service
providers in India. The company also enjoyed its reputation due to its punctuality and
outstanding performance. The business organization also carried 1.28 million passengers. The
service provider also attracted large number of business travellers availing the services
offered by the business organization (Ahuja & Alavi, 2018). However, the business
organization ceased all its operations in the year 2019 with its last revenue by Jet Connect
Boeing 737. Jet Airways it had gained largest market share of 22.6% as compared to its major
competitors Spice Jet and Indigo. The competitors in the airlines industries reduced their
fares consequently which made the company follow the suit which degraded its performance
and led to financial loss. The market share of the business organization dropped below Indigo
and thus led to bankruptcy(Ahuja & Alavi, 2018). The purpose of this report is to analysis the
issues faced by the business organization which led to the downfall of the business
organizations. It also provides suggestions and recommendations.
Discussion and analysis
Jet Airways private limited had much reputation and brand image in the Indian market
due to its service quality and performance. However, the business organization failed to
maintain its service quality and performance with the presence of competitors and other
micro and macro environmental factors affecting the smooth operations of the business

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organization. Experts blame the management and leadership styles of the managers in the
business organization, which led to financial losses and struggles. Eventually, the business
organization failed to provide timely salaries and wages to the employees. According to Al
Nahyan & Abdel All, (2017), the business organization had to face severe crisis, the
management grounded more than 60 percent of plans in order to retain their staffs and leaders
in the organization. Inability to keep up with the competition and other changes in the
business environment, the management had to take up to 25% of the employee’s salaries as a
cost of operation. Additionally, as stated by Al-Ansari, (2017), the pay cuts increased
gradually which causes dissatisfaction and discontentment among the staffs and the
employees of the business organization. The pilots disagreed with the management regarding
their pay cuts.
As per research and analysis, it has been identified that poor leadership style and
management approach led to the downfall of the business organization. According to Al-
Ansari, (2017), there had been a lack of direction in the business organization. The pay costs
had been a part of cost cutting exercise. It is believed by Daddikar & Shaikh, (2014), that
payroll of the staffs and the employees were important components of the cost structure of
the company which was undervalued by the business organization. The Jet Airways private
limited also stated that there were highly focused on growth and sustainability. However, as
stated by Deeba, (2014), the business organization continued to earn small profits with high
operational costs. The price of crude oil reached height with depreciated value of Indian
Rupee against the Dollar. During this time, the airlines industry faced huge losses especially
Jet Airways private limited. As mentioned by Jones & Chauhan, (2019), with this crisis the
performance of the business organization had degraded. Further, lack of effective
communication has also been argued as potential reason for the downfall of the business

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organization. There had been lack of communication with the employees and the
management of the business organization. In the middle of such crisis, the company was in
need of funds to overcome its liquidity crisis. Hence they have been accused of micro
managing their resources. As per Mehra, (2011), there had been a negative work place
environment in the business organization. The low wages and salaries caused discontentment
among the employees and the staffs. The company had reached at a particular stage, where
they had to sell off their stakes. According to O’Connell & Williams, (2006), there had been
a huge turnover of employees during the crisis period. It have been argued, that the business
leaders and the managers lack vision and lack coordination and cooperation in the business
organization. The founding member of Jet Airways private limited quit the company during
the crisis, which indicates a bad leadership example. The leaders and the managers of the
business organization failed to effectively communicate with the employees especially when
a founder member quit the company leaving it in further crisis. As stated by O’Leary, (2016),
the responsibility to overcome the financial crisis amidst the loss must be taken by the CEO
of the company Vinay Dube. However, the leaders and the managers of the business
organization had been incapable to manage the organization amidst the crisis led with their
greed and ego. The leaders exited the company, who could have saved the company from the
crisis situation.
Moreover, according to Pawar (2020), there had been loss of morale and motivation
in the organization especially considering the pay cuts, lack of communication, cooperation,
coordination and turnover. The board of directions and the management was composed of
exceptional talent and experienced people. However, as per Pendleton & Furnham, (2016),
they lack proper implementation of knowledge and innovation, which resulted in the
downfall of the business organization. The senior managers and the leaders of the business

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organization were unable to take entrepreneurial decisions and act accordingly. It has been
argued by Prashar & Aggarwal, (2019), that founder Naresh Goyal failed to include the ideas
and opinions of other members and professional associates. The budget carrier had been
accused of haemorrhaging money. Most importantly, Rossi et al., (2019), argue that the
presence of stiff competition in the airlines industry also led to the failure of the business
organization. The competitors had been offering low budget flight services. On the other
hand, Jet Airways only catered their services to the corporate and failed to respond to the low
cost carriers. The competitors took away the customers of the Jet Airways, especially the
price sensitive customers.
According to Sahu, (2018), the management style and approach of Goyal had been
criticized. His autocratic leadership style with single management team led by him was a
misstep of the business organization. Moreover, the business management lacked proper
business model and continuously changed their business model which confused the
passengers and the investors of the business organization. Further, as per Srivastava, Basu &
Gururajan, (2018), the business organization lacked transparency in their decision making.
They have been accused of bad investments which further deteriorated the financial situation
of the business organization and resulted in huge borrowings from banks. It kept accruing
debts. It was stated by Srivastava, Basu & Gururajan, (2018), fluctuating price of crude oil
complicated with poor management styles along with financial instability of the business
organization weakness the position of the business organization, thereby degrading its
performance. This led the business organization to saddle with huge depts. and losses. The
business organization failed to manage its financial position and balance sheets accompanied
with the cyclical changes in the industry. Therefore, both internal and external business

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environment had been responsible for threatening the stability and sustainability of the
business organization, which ultimately led to the failure of the business organization.
Conclusion
Therefore, from the above analysis, it can be concluded that poor management styles
and approaches of the business organization led to the failure of the business organization and
resulted in bankruptcy. Incompetent leaders and managers of the business organization lacked
proper vision and direction in the business organization. Jet Airways enjoyed reputed and
quality performance in the airlines industry in India. However, it failed to keep up with the
stiff competition in the external business environment. The leaders and managers of the
business organization failed to analyze the threats and possible opportunities from the
external business environment. It has been identified that the business organization lack
transparency in the decision making of the organization, it lack proper direction and lack
proper coordination and cooperation among the members of the business organization.
Moreover, ineffective leaders in the organization have been equally blamed for the downfall
of the business organization apart from the rise in the price of crude oil and depreciation of
Indian Rupee against Dollar. The business organization failed to analyze the completive
environment of the business organization. Eventually, the competitors took away the
customers of Jet Airways. They leaders and the senior managers were incompetent to
recognize the low cost carriers. They lacked proper decision making in the business
organization. The staffs and the employees were dissatisfied with the operations and decision
making of the management; this led to huge employee turnover and loss of competent
employees in the business organization. Lack of proper financial investments in the business
organization also led to failure of the business and resulted in huge losses.

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Recommendations and suggestions
From the above analysis, it has been identified that there had been various loopholes
in the managerial process and limitations of the business along with the threats from the
external business environment which ultimately led to the downfall of the business
organization. Therefore, as mentioned by Tikku & Sherman, (2019), focused operations are
recommended to stabilize the performance and quality of service by the airlines company.
The business organization can seek governmental intervention and gain support from the
banks in order to save the business from bankruptcy. Effective managerial decision making is
highly essential for the business organization. According to Upadhyay, (2019), the
managerial styles and leadership approaches of the business organization has been highly
blamed in the business organization. As mentioned by Venkatachari & Wala, (2014),
effective communication in the business organization is highly essential for the business
organization to overcome any form of crisis situation. The leaders must implement a
situational leadership approach and act as per the prevailing situation in the organization. The
employees and the staffs of the business are important stakeholders of the company; therefore
their inclusion in the decision making of the organization is crucial of the business
organization. Therefore, it is recommended that the business organization must involve the
employees and the staffs in various decision making process of the business organization.
According to Vértesy, (2017), the leaders of the business organization must take the
responsibility to analyze the internal and external business environment from time to time to
determine the possible threats and opportunities. The leaders must provide clear direction to
the employees and the staffs rather than quitting in the middle of any crisis. This leadership
quality is critical for the success of Jet Airways as well as other operating business
organizations. Lack of employee involvement and effective communication in the business
organization had wounded the reputation of the company. Therefore, transparent decision

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making and employee involvement in the decision making process is of high importance. It is
recommended by Kalsie, (2014), that the available finds and resources of the business
organization must be allocated effectively so as to ensure maximum return on investment. It
has been analyzed that the business organization considered pay cuts during the crisis, which
further deteriorated the work environment and dissatisfied employees. Therefore, it is
recommended to gain full support from the employees especially during the crisis situation as
stated by Venkatachari & Wala, (2014), they must be communicated effective regarding the
situation prevailing through transparent decision making. It is recommended to have proper
vision in the business organization which fosters trust and confidence among the people in
the business organization. As per the opinion of Vértesy, (2017), Jet Airways leader lacks
coordination among the people in the business organization. Therefore, it is highly
recommended to have leaders and managers who have the ability to coordinate with other
members of the business organization. There must be morale and ethics in the business
organization, this is highly essential for the success of any business organization. There
senior managers and the leaders of the business organization must be composed on talented
and experienced members of the business organization who have the ability to manage the
organization especially in terms of crisis. Considering the case of Jet Airways where Goyal
was unable to implement his knowledge, which resulted in the loss of the business
organization. Therefore, in times of crisis, it is the responsibility of the leaders and the
managers to provide clear direction to the business members and ensure to gain their trust and
confidence in the business organization. As per the opinion of Venkatachari & Wala, (2014),
If Jet Airways would continue its business operations it could have recovered the losses
incurred by the business through multiple perennial revenues and could have saved more
jobs. It is also recommended that the managers and the senior leaders must be elected by the
promoters of the business organisation rather than the people who aim to protect their self

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interests. Moreover, according to Vértesy, (2017), it is the responsibility of the Securities and
the Exchange Board of India to analyze the practices of the business and consider changing
the rules. The Jet Airways was mostly composed of bureaucrats and incompetent leaders
which led to the downfall of the business organization. Considering the present situation of
Jet Airways, with hue financial depts., losses and employee turnover, the business must be
sold to competent people who have the ability to gain back the position of the business
organization and regain its position in the market.

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