Tuesday, October 22, 2013

Jet Airways to take flight to medium-haul overseas routes post Etihad Deal Tweet

MUMBAI: Jet Airways may shift focus to medium-haul international routes with its margins under pressure in the local market and partner Etihad Airways set to control most of the long-haul traffic in their combined network.

India\'s second-biggest airline by market share plans to start flights to at least 15 new routes, including locations such as Oman, Muscat, Kuala Lumpur and Guangzhou, said a person close to the development.

It may also look at increasing its current fleet size of 100 aircraft by close to 50%, either by leasing or buying planes, he added.

A Jet spokesperson refused comment. Etihad didn\'t immediately reply to an emailed questionnaire.

Analysts expect the regional international sector to see the highest traffic growth, thanks to a growing preference among Indians for cheaper holiday destinations, a push by countries to promote tourism and low-fare carriers such as IndiGo, SpiceJet and AirAsia flying to these routes.

Sydney-based CAPA-Centre for Aviation recently said it expects international traffic to and from India to double to 100 million by the financial year 2020-21. In the four months to July 2013, it was up 11%.

In sharp contrast, India\'s domestic traffic growth rate has slowed down in the past few years, and is currently hovering at low single digits. Most airlines in the country are making losses, thanks to high aviation fuel prices, oversupply and cut-throat competition, which is forcing airlines to sell tickets below cost.

Moreover, the domestic aviation industry will soon see two more carriers - AirAsia and Singapore Airlines - establishing and rapidly scaling up operations.

For the April-June quarter, Jet\'s operating margins on domestic operations dropped to 3.6% from 15% a year earlier. Margins on international flights, however, increased to 17.4% from 17% in the previous year.

The airline posted a loss of 2,630 crore on its domestic operations, compared with a profit of 168 crore in the previous year. On its overseas operations, it posted a loss of 924 crore, compared with a profit of 165 crore a year earlier.

Jet Airways currently operates 550 daily flights (165 international and 385 domestic) to 20 overseas and 51 local destinations. It operates long-haul flights to London, Toronto and Newark, either directly or via its hub in Brussels.

The person said Jet has been advised to do away with the Brussels hub, and operate limited non-stop long-haul flights. The rest will be handled by Etihad Airways through its hub at Abu Dhabi. Jet is planning to connect several Indian cities to the middle-eastern destination, which will feed into Etihad\'s global network.

Over the past one month, Jet\'s executives, including CEO Gary Kenneth Toomey, Director Anita Goyal, Senior Vice-President (planning & alliances) Raj Sivakumar and Senior General Manager (planning) Abhijit Dasgupta, have been working out these plans with Etihad officials such as its Vice-President (finance) Rangesh Embar, said the person. Embar is expected to soon join Jet\'s finance team.

The airline currently has a fleet of 76 narrow-bodied and 24 wide-bodied planes, six of which are leased to other airlines. Jet may look at increasing the number of wide-bodied jets to 40 and add more than 35 narrow-bodied aircraft, the person said.

The airline has already received approval from the civil aviation ministry to buy up to 50 Boeing Max 737 planes which will join its fleet between 2018 and 2020.
News From: http://www.7StarNews.com

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