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The competitive landscape of the U.S. domestic airlines dramatically changed when the industry was deregulated in 1978. While airline traffic and revenues grew exponentially, aided by unfettered market competition and resulting efficiency, airline profitability had mostly stayed lackluster due to cost pressures, chronic oversupply of seats, and intense price-based rivalry to fill seats. Thirty-two years into deregulation, the major airlines were still searching for the Holy Grail that would defend them against industry threats and deliver sustained profitability. This case describes the evolution of the U.S. domestic airline industry over the years, the cost pressures and revenue uncertainties airlines faced at the beginning of 2010, and the strategic options they were contemplating to effectively deal with these issues. The options ranged from shaping the industry structure to achieving differentiation through service offerings. The exact choices they made would determine their survival and long-term success.

Strategic management, system control management (balance score card).

Post graduate student, managers.

This case examines “Garuda Indonesia” the National Indonesia airline and its exceptional performance in recent years due to successful strategic decision making. This comprehensive case is structured in five parts highlighting: Garuda's recent success based on positive strategic management; Garuda's history and how it shaped its success against strong competition through effective leadership and the challenges it has overcome; an examination of the development within the Indonesian airline industry; a focused examination of strategic development with Garuda, including competition policy; operational planning and delivery; debt restructuring and product/service strategy; and an examination of the ongoing challenges, including governmental pressures and political maneuvering.

Students will identify opportunities and threats, including strategic issues derived from the external environment facing by Garuda Indonesia. Students will identify strengths and weaknesses from the internal environment faced by Garuda Indonesia. Students will develop strategic alternatives to inform business decisions. Students will give recommendations including priority planning for the next three to five years.

Teaching note.

The expected learning outcomes are to understand the complexities involved in the integration of two carriers with different business strategies and approaches, the merger of two brands with distinct personas and identities and the confluence of two different cultures; figure out the strategic options in front of the Tata Group and how it can deal with various macro- and micro-level business challenges, defy the financial hiccups and manoeuvre the operational complexities to accomplish mission Vihaan.AI; and develop a pragmatic approach to macro and micro business environmental scanning for making strategic business decisions.

In November 2022, Tata Group, the salt to software conglomerate, announced the merger of Air India (AI) and Vistara. This would lead to the formation of the full-service airline under the brand name “Air India”. The obvious reason behind this was the higher recognition, salience and recall of the brand AI as compared with Vistara in the global market. The Tata Group envisaged the brand AI to be a significant international aviation player with the heritage, persona and ethos of the brand Vistara in the renewed manifestation of AI. To realise these goals, Tata Group laid down an ambitious plan called “Vihaan.AI”, which was aimed at capturing a domestic market share of 30% by 2027.

This case study can be taught as part of undergraduate- and postgraduate-level management programmes.

Teaching notes are available for educators only.

CSS 11: Strategy.

Strategic Management/General Management.

MBA/Executive MBA.

Malaysia Airlines (MAS) was incorporated in 1937 to operate in Singapore, Kuala Lumpur and Penang. The first period of crisis was witnessed in 1997/1998 due to the Asian Financial Crisis, MAS reported RM 260 million in losses. The airline recovered from the loss and reported profit of RM 461 million in 2004. However, it experienced another loss of RM 1.25 billion in 2005. This lead to implementation of the Business Turnaround Plan 1 in 2006. The Business Transformation Plan 2 was announced in 2008, but the period of losses hit the airline again in 2011. Overall, MAS has witnessed continuous cycle of losses and profits. Despite the turnaround efforts, the airline does not seem to be recovering; is there a safe landing for the troubled airlines?

The case can be used to illustrate economics and complexities of aviation industry, different business models existing in airline industry, quantitative and qualitative aspects of a turnaround strategy, failure to sustain turnaround efforts, and predicting the future scope for a player in airline industry.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

At the dawn of the twenty-first century, Boeing and Airbus, the leading manufacturers of large aircraft, were locked in a battle for market share that drove down prices for their new planes. At about the same time, the two industry heavyweights began developing new aircraft families to address the future market needs they each projected.

Aircraft take many years to develop, so by the time the new planes made their inaugural flights, significant changes had occurred in the global environment. First, emerging economies in the Asia-Pacific region and elsewhere were growing rapidly, spawning immediate and long-term demand for more aircraft. At the same time, changes to the market for air travel had created opportunities for new products. These opportunities had not gone unnoticed by potential new entrants, which were positioning themselves to compete against the market leaders.

In October 2007, the Airbus superjumbo A380 made its first flight. The A380 carried more passengers than any other plane in history and had been touted as a solution to increased congestion at global mega-hub airports. Four years later the Boeing 787, a smaller long-range aircraft, was launched to service secondary cities in a point-to-point network.

The case provides students with an opportunity to analyze the profit potential of the global aircraft manufacturing industry in 2002 and in 2011. Students can also identify the actions of participants that weakened or intensified the pressure on profits within the industry.

Audio format (.mp3 file) available with purchase of PDF. Contact cases@kellogg.northwestern.edu for access.

The case study highlights two strategic angles – that of the business unit (business strategy, profitability, market leadership. organizational culture, operational turnaround, industry structure and competitive dynamics) and the owner (returns, repositioning strategy and funding plan). By the end of this case study, students would be able to understand the changing competitive forces of a dynamic industry; analyse the circumstances leading to a change in the control of a firm from the state to the private sector; understand the logic of acquiring a perennially loss-making firm operating in a volatile environment without a unique strategy; identify a firm’s strategic and operational choices for financial turnaround, return to profitability and regaining market leadership; and learn about the actual strategic realities and choices confronting a troubled business organization in a difficult industry.

When the Tata Group took over Air India on 27 January 2022 from the state that had ownership for 68 years, Air India was under a long spell of poor performance, bleeding losses and unmanageable levels of debt. Unsatisfactory customer service, management issues and competition were the key reasons. Therefore, a crucial question facing the group’s Chairman N. Chandrasekaran was what workable strategy he could use to reposition Air India and make it profitable again so as to recover the $7.5bn of estimated investment involved in the acquisition and turnaround.

This case study is intended for undergraduate and graduate executive education levels in business administration and management and allied subjects, particularly for courses in strategic management, marketing, financial management, turnaround and transformation, mergers and acquisitions and organizational change.

Teaching notes are available for educators only.

CSS 11: Strategy.

This case helps students to analyze non-financial and financial aspects of a company and observe quantitative and qualitative aspects of decisions and decide whether to invest or not and give suggestions to sell, buy or hold stocks. The case is expected to help the students understand and analyze the following points: the overall performance of the company and industry, how fundamental and technical analysis is applied to reach investment decisions, the areas where Jet Airways occupies the top position compared to peer group (competitor analysis), the company’s financial position and valuation with the help of tools and techniques and suggestions and observations to shareholders whether to buy/sell or hold shares.

This case can be used for MBA (Finance) students on equity research and valuation. Students are introduced to the fundamental procedures of equity research and analysis – evaluating sector desirability, financial modeling, equity valuation methods. To enhance research skills, students are required to acquire basic knowledge on macro and micro economic indicators. This case helps students to analyze non financial and financial aspects of a company and observe quantitative and qualitative aspects of decisions and decide whether to invest or not and give suggestions to sell, buy or hold stocks.

Mr Rahul, a consultant in Karvey brokerage house was about to leave the office on the evening of March 24, 2015 when the phone rang. It was Mr Srirag, one of his clients and close friends who was passionate about investing in shares. Mr Rahul with his two decades of experience in monitoring and advising various investment plans has been continuously advising Srirag on different investments in shares. Srirag said “Rahul! You know that I bought many shares in Jet Airways. While studying the annual reports of Jet Airways 2014-2015 about its business profits and losses, I came across a January to March, 2013 business quarter analysis report that wrote about Jet Airways facing a net loss of 4.95 billion rupees due to over debt burden and interest costs. It also stated that the company sold a 24 per cent stake in 2013 to Etihad for 332$ million which is an Abu Dhabi based airline. The news said that the deal would help the company overcome financial challenges, raise cash, cut costs and gain access to the global flight network. I am worried about whether this deal would allow the company to continue its operations from India or not. I am also concerned about the downfall of Kingfisher, a major setback in the aviation industry in India that owes 8,000 crores to its employees, banks, airports, oil companies. I am worried that either my investment in Jet Airways might bring huge losses or the partnership with Etihad airways would result in the reduction of costs and due to joint sales efforts, sharing resources and network integration thereby leading to a valuable share price. Since your guidance has helped in many issues, I would like to know the present condition and future prospectus prevailing in Jet Airways”. With a lot of ambiguity in his mind, he asked Rahul to recommend if he should hold or sell the shares in Jet Airways.

The case is expected to help the students understand and analyze the following points: the overall performance of the company and industry, how fundamental and technical analysis is applied to reach investment decisions, the areas where Jet Airways occupies the top position compared to peer group (Competitor analysis), the company’s financial position and valuation with the help of tools and techniques and suggestions and observations to shareholders on whether to buy/sell or hold shares.

The link to the following videos to be sent to participants in advance to help them prepare for the class. www.youtube.com/watch?v=_3XJXTmILyk, Equity Research Presentation: Coca-Cola, www.youtube.com/watch?v=n5pEK_2uItg Write Equity Research Report, format, process, www.youtube.com/watch?v=mMLJccgiSTk Equity Valuation and Analysis-Part I.

CSS 1: Accounting and Finance.

The case concerns introductory marketing management.

This case is suitable for MBA students.

The case explains the current situation encountered by the airline industry in India. This case gives the reader a detailed picture of the reasons for the growth and the subsequent troubles faced by the Indian aviation industry.

The case is aimed at helping the students to analyse a marketing situation both from a macro-economic point of view and from an individual company perspective.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

The case aims to understand and analyse the capital structure decisions made by a profit-making, growing organisation which aimed to be India’s premier airline and the market leader. The company that had pursued a high debt policy, to take advantage of the financial leverage that it would get, was now facing problems in an operating environment that proved to be challenging. A decline in operating profit, coupled with high-interest costs and an uncertain environment with cutthroat competition, had caused the company to plunge into losses. Attempts to deleverage by equity infusion were proving to be difficult. The case can be used in MBA, Executive Education and doctoral programmes. The learning objectives of this case are: to analyse the capital structure of the company, to interpret the relationship between financial leverage and risk, to assess the pecking order theory, to analyse the nuances of the aviation sector and the factors influencing the profitability of the companies in the aviation industry, to estimate the risks and the rewards associated with foreign currency loans, to evaluate the magnifying impact of the financial leverage and to propose deleveraging methods like sale and leaseback, debt conversion to equity and devise a revival strategy for the company.

The case discusses the dilemma faced by Naresh Goyal, promoter and chairman of Jet Airways (India) Limited. At the initial stage, Jet Airways, like many other companies in its growth phase, relied on borrowed funds to meet its investment needs. However, over-reliance on borrowed funds with just one equity infusion resulted in a high leverage ratio and an aggressive capital structure. Moreover, the company operated in a sector that was highly regulated, with competition that was cutthroat and a cost structure that was volatile. A high operating risk, coupled with high financial leverage, pushed the company into incurring losses. Having run out of cash, Jet Airways eventually defaulted on loan repayments to its lenders. Facing the eventuality of losing control of the company to lenders or to a strategic investor, Goyal was trying to figure out a way to save the company from insolvency and liquidation. It was becoming increasingly difficult for Goyal to keep Jet Airways, the company he had nurtured like a baby, airborne.

The case can be taught in both online and offline modes of delivery in a 90-minute session. Post-covid, the delivery mode of classes has changed. In online sessions, it may be a challenging task to ensure student participation.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

The airline passenger industry in India was a mess in 2013, but the low-cost carrier IndiGo was making money. This relatively new company had managed to work against the odds and grab market share from longer-established flyers. Still, the weak rupee, depreciated by 15%, was sending a chill wind through the aviation sector, and growth plans would have to include opening new destinations. This meant hiring more employees, opening more ticketing stations, and increasing costs. Could the airline continue its climb, or would it be prudent to prepare for a hard landing?