Jet Airways to ease off on global expansion from November
28 Aug 2008
Mumbai: Jet Airways, India's largest private airline by passengers flown, has decided to stall its global expansion programme for a year, starting November this year. The move comes in the face of a mounting industry-wide downturn and also ahead of the launch of international operations by rival Kingfisher Airlines.
According to airline officials, the carrier has been expanding rapidly over the last 18 months and has reached a stage where it needs to work on the synergies offered by its international and domestic services. Though no details are available, it will very likely realign its domestic network in line with its international flights to reduce waiting time for passengers from smaller cities on connecting flights, amongst other rationalisations.
Jet Airways now flies to 20 international destinations in the US, West Asia, Hong Kong, Singapore, China and Malaysia. This compares to 35 international locations offered by Air India, which is not only the country's flag carrier but also operates the oldest international service in the region.
Jet's decision to stall expansion plans comes even as passenger traffic on domestic routes fall and jet fuel prices in the country gain 60% over the past year. Together, airlines have scrapped almost 15% domestic flights. Competition over international routes is also set to stiffen with the launch of operations by Bangalore-based Kingfisher Airlines and also the lowering of ticket prices by NACIL carriers, Air India and Indian.
Under provisions of the bilateral agreement between the government of India and other countries, Jet has already bought the maximum number of seats that are available on various international routes. It already has a first-mover advantage over Kingfisher in various sectors and now it will realign connecting services from smaller cities to metros so that they connect with international services operating from here.
The company expects international and domestic operations to contribute equally to revenue. Currently, in the quarter to June, about 48 per cent of Jet's revenues have come from international operations. According to airline executives, this is expected to go up to 50 per cent in the coming quarters and remain largely at that level over the coming years.
Officials also said that the carrier had already realigned timings of various international flights with other long-haul flights. For instance, the Delhi-Kathmandu flight now connects with the Delhi-London flight.
Jet Airways has posted a loss of Rs253.06 crore for the year ended 31 March. This compares with a net profit of Rs27.94 crore in the previous financial year.
