New flight path: JetKonnect, JetLite to merge

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In a major strategic shift, India’s second largest flyer Jet Airways plans to converge JetKonnect and JetLite into a single full-service brand, putting an end to separate operations. This is being done largely to reduce cost and debt pressure, even as the company cut its losses by 26 per cent to Rs 258 crore in the first quarter of the financial year 2014-15 after the tie-up with Abu Dhabi-based Etihad Airways

In the first joint conference by Jet and Etihad after the latter bought 24 per cent stake in the company, Jet Airways chairman Naresh Goyal and Etihad president and CEO James Hogan said Jet would now turn into a single full-service brand. This would mean aligning costs with economy class operators and still being competitive in the domestic market.

Goyal said, “With this announcement of single full-service brand we will see how the 80 per cent people who travel on low cost carriers (LCCs) stay with us. The company has two major issues to resolve: one is that of meals and second to reduce cost at lounges and the airports. We are going to introduce 12 seats in the front as business class and 156 seats as economy class across our aircrafts. It is likely to improve our costs and optimise efficiency in comparison with other LCCs.”

James Hogan of Etihad said, “We do not want to say that we are exiting the LCC business, though we are restructuring to tackle the cost and debt pressure. The debt has been partly taken care of by infusion of equity by Etihad while other measures like single full-service brand would further reduce the pressure on cost. Besides, the services would be scaled for all customers at competitive rates where they would also be able to earn frequent flyer points on domestic routes and burn on global Etihad routes.”

Jet Airways Group reported a better first quarter performance as its three-year turnaround strategy and the partnership with new minority shareholder Etihad Airways started to impact the business positively.

The net loss before tax is Rs 258 crore, compared to a net loss of Rs 348.5 crore in the same quarter last year. This is the sixth consecutive loss for the company due to fierce price war and domestic competition.

Total revenue (combined) for the first quarter, however, increased by 12.8 per cent to Rs 5,040 crore while passenger revenues for the same period rose by 11.1 per cent to 4,262.6 crore and cargo revenue by 10.2 per cent to Rs 363.3 crore.

The total number of revenue passengers who traveled with Jet Airways increased by 4.3 per cent to 5.19 million from 4.98 million, with passenger load factor increasing by 2.3 percentage points from 77.9 to 80.2 as the airline gained new customers.

To build on its partnership with Etihad, the company plans to launch 12 new international flights by the end of the year. These destinations include Abu Dhabi, Dubai, Doha, Singapore, Ho Chi Minh City and Bangkok. The airline also has long-term plans for non-stop operations to Europe and China using wide-bodied aircraft. “The organic network expansion coupled with enhanced global connectivity through codeshares is expected to increase international passenger traffic significantly,” said CEO designate of Jet Airways, Cramer Ball.

Also, Jet Airways will dry-lease one of its Boeing 777-300ER to Etihad Airways to operate a new daily service to New Delhi and San Francisco from Abu Dhabi starting on November 18, 2014. Besides, the company would start new services from Pune, Goa, Ahmedabad and Lucknow to Abu Dhabi. Travellers from India would now be able to clear US customs and immigration checks in Abu Dhabi, thereby avoiding airport congestion and saving time.


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