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What went wrong with Jet Airways' no-frills brand Konnect

Last updated on: August 21, 2014 11:11 IST

What went wrong with Jet Airways' no-frills brand Konnect

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Aneesh Phadnis

Jet Airways is going back to its roots after five years of flirting with a no-frills brand.

The airline has promised a full service two-class cabin offering across its entire fleet by the year-end-a move triggered by weak performance and cold customer response to its no-frills brand Konnect.  

Jet Airways launched Konnect in May 2009 "to meet the needs of the low fare segment and complement its full service product." It began by offering no-frills service on three planes and a handful of routes.

In 2012, even the subsidiary JetLite's service was rebranded as Konnect. Today it covers about 60 per cent of Jet Airways' domestic flights and all of JetLite-operated flights. However, the Konnect brand has failed to earn both popularity and profit.

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Image: Jet Airways has shut down its low fare subsidiary JetKonnect.
Photographs: Vivek Prakash/Reuters

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What went wrong with Jet Airways' no-frills brand Konnect

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While Jet Airways lost domestic market share as it cut capacity, data provided by the Directorate General of Civil Aviation show that the airline has been carrying fewer passengers per flight than its rivals.

In 2013, Jet Airways reported a load factor of 71.5 percent. Load factor is an indicator of occupancy and Jet's loads were lower than GoAir, IndiGo, SpiceJet and only marginally higher than Air India.  

Even in the first seven months of 2014, Jet Airways' load factors are amongst the lowest in the industry and the achieved loads are far lower than what's required to break even on domestic routes.

Jet Airways' domestic operations contributed about 45 per cent of its total revenue and nearly 70 percent of its pre-tax loss on a standalone basis in FY 2014.

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Image: Jet Airways' domestic operations contributed about 45 per cent of its total revenue and nearly 70 percent of its pre-tax loss on a standalone basis in FY 2014.
Photographs: Reuters

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What went wrong with Jet Airways' no-frills brand Konnect

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In FY 2014, Jet posted a record Rs 4,129 crore (Rs 41.29 billion) loss and the result was impacted due to one-off maintenance expenses and Rs 700 crore (Rs 7 billion) impairment on account of the negative net worth of its subsidiary JetLite.  

The Konnect brand has had to grapple with perception issues.

Last week, Jet Chairman Naresh Goyal acknowledged that the airline had confused customers with two brands and announced that the airline will streamline domestic operations, create a strong, uniform Jet Airways master brand and improve its product and service offering.  

Jet Airways did not respond to an email query on the topic.

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Image: Jet Chairman Naresh Goyal acknowledged that the airline had confused customers with two brands and announced that the airline will streamline domestic operations, create a strong, uniform Jet Airways master brand and improve its product and service offering.
Photographs: Amit Dave/Reuters
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What went wrong with Jet Airways' no-frills brand Konnect

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Jet executives admit running two brands on domestic routes with a Boeing 737 fleet having various seat configurations has been a challenge as it gave little operational flexibility and impacted brand consistency.  

Along with brand overhaul, Jet Airways is also reconfiguring its fleet to a standard 168 seat configuration (12 business class and 156 economy class) and is restructuring its frequent flyer programme to woo customers.  

While IndiGo has been very creative with its advertising and marketing focusing on punctuality and service reliability, Jet Konnect created a perception that it is only a re-branded version of JetLite or Air Sahara, a Jet executive remarked.

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Image: Jet Airways is reconfiguring its fleet to a standard 168 seat configuration.
Photographs: Amit Dave/Reuters

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What went wrong with Jet Airways' no-frills brand Konnect

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"Operating Boeing 737 with various configurations did not give us flexibility."

"These have 8-16 business class seats and the balance economy seats. From an operational point of view when an aircraft develops snag, another one was put in service. That allowed us to maintain our on-time performance but often it impacted brand consistency and confused customers," the executive said.

With a standard 168 seat configuration, the airline will not face the problem.  

The changes in the frequent flyer miles programme will also benefit customers. Until now, miles were awarded to passengers based on distance flown.

For shorter routes of 100-200 miles, the award was restricted to 100-200 mileage points.

Further, there is a disparity between miles offered on Jet Airways and JetKonnect flights (Konnect flights only earn 75 per cent of miles earned on Jet Airways flights).

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Image: Jet Airways will face stiff competition from Tata-SIA JV airline Vistara.
Photographs: Reuters

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What went wrong with Jet Airways' no-frills brand Konnect

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After the change, a passenger will earn a minimum 500 miles even for short distance flights. Additionally when Konnect brand gets phased out, passengers will earn miles uniformly on all flights.  

Jet executives also argue that the cost of a switchover to a full service model across the entire network would be small but the service itself can be a key differentiator.

"In the current environment, cost of fuel, maintenance, lease, airport charges are high and largely similar for all airlines. The cost of delivering additional services, miles etc is minimal," he said.  

Also, while the airline will stop charging for food, it can and will still continue to charge fees for other services - date changes, extra luggage, cabin upgrades, seat selection and so on.

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Image: Jet executives also argue that the cost of a switchover to a full service model across the entire network would be small but the service itself can be a key differentiator.
Photographs: Reuters
Tags: Konnect

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What went wrong with Jet Airways' no-frills brand Konnect

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Steve Forte

"I think the main trigger for Jet's brand overhaul could have been the start of the Tata-Singapore Airlines venture, Vistara, which seems to have a precise strategy in mind.

I am sure Etihad was a participant in the decision. From Etihad's point of view, I would think it would want to have an airline in its simplest form possible - lean and mean, as they say.

That would be a good base from which to build. Combining the two operations should increase efficiency as long as they are willing to eliminate redundancies in personnel and infrastructure," said Jet Airways' former CEO Steve Forte.  

Brand experts say the overhaul was inevitable as Konnect did not stand for anything except a watered down version of Jet. The most common error companies make while launching a low-cost variant is to position it as a cheaper version of the premium brand. 

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Image: The main trigger for Jet's brand overhaul could have been the start of the Tata-Singapore Airlines venture, Vistara, which seems to have a precise strategy in mind.
Photographs: Vivek Prakash/Reuters

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What went wrong with Jet Airways' no-frills brand Konnect

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"That should never be the case as a lower priced product has the opportunity of reaching out to a new segment. That opportunity would be lost as nobody wants to buy a brand that is perceived cheap. Jet Konnect should have been positioned differently, perhaps as a younger, vibrant brand," said brand expert Alok Nanda.  

Saurabh Parmar

Saurabh Parmar, founder and CEO of Brandlogist, says the problem with Jet is that over the years it has had multiple brands like Jet, JetLite, JetKonnect and Konnect Select. But the airline failed to innovate and worse created a huge confusion.

 


Image: Jet Airways has fine-tuned strategies to survive in the full service segment.
Photographs: Reuters

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