The country’s largest private carrier by market share, Jet Airways, has decided to build its bargaining power by expanding its global footprint before joining one of the world’s leading airline groupings like Star Alliance and OneWorld. As part of this strategy, the airline plans to widen its partnership with existing code-share partners such as Etihad, Brussels Airlines and Malaysian Airlines to expand its network. “The strong global network would enable us to bargain with foreign airlines when we join any of the major alliances. If we are weak, we will end up paying more as fees to other airlines for each passenger that takes connecting flights on our network,” a Jet official not wishing to be named told FE. Stronger airlines stand to gain more in a code-share agreement as they pay less interline service charge and commission to the alliance partner that has a smaller presence. The Naresh Goyal-owned carrier has, therefore, sought government permission to partner with Etihad for offering an alternate route for its customers flying to Paris, Munich and Frankfurt. This is part of a dozen applications which also include permission for tie-ups with Brussels Airlines and Kenya Airways besides additional seats on its Dubai, Oman, Kuwait and Colombo routes. It also plans to fly to Manila.“As the global economy is mending and air travel is recovering, we as a growing and responsible carrier will always be on the lookout for growth opportunities that offer a quick maturity of flights to profitability,” Jet Airways chief commercial officer Sudheer Ragahavan said. It posted a net profit of Rs 106 crore during October-December in 2009-10. A code-share or marketing alliance allows carriers to cross-sell seats and generate additional traffic, which brings revenue at a relatively lower cost. Becoming the member of an alliance brings synergies among carriers as they use each other’s airport infrastructure. Jet, along with its wholly-owned subsidiary JetLite, has a fleet of 112 aircraft and operates 790 daily flights. The airline generates nearly 60% of its revenue from international operation. “Jet is taking a very thoughtful and calibrated decision. The alliance structure would change in the next 12 months due to consolidation in the market,” Centre for Asia Pacific Aviation (CAPA) India head Kapil Kaul said. While it plans to expand in Sweden with the Brussels Airlines deal, its proposed tie-up with Kenya Airways would help it book customers for Dar-es-Salaam. Two other full-service carriers Air India and Kingfisher Airlines have, however, already announced their plans to join Star Alliance and OneWorld respectively.
The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).
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