Jet, Kingfisher alliance to "help stabilise India's aviation sector"
15 Oct 2008
Mumbai: In a move that caught not just the aviation industry, but indeed the nation by surprise, the country's largest private-sector carriers Jet Airways and Kingfisher Airlines have announced a wide-ranging operational alliance intended to help them battle slumping demand and rising costs.
A joint statement issued by the two companies late Monday said they had decided to work together "in larger national interest and help stabilise India's aviation sector."
Recessionary tendencies around the globe, coupled with rising costs, particularly fuel, have ensured that India's airline sector has taken massive losses. These losses are estimated to be in the region of a billion US dollars in the fiscal year to March 2008. It is widely expected that the airlines will double their losses to $2 billion in the current fiscal.
Both Jet and Kingfisher have affected mergers with other carriers - the full service provider Air Sahara in the case of Jet and low cost carrier Air Deccan in the case of Kingfisher.
Both these carriers operate common routes in India and, lately, abroad with Kingfisher receiving clearance from regulatory authorities for international operations.
"India has witnessed tremendous growth in the past which has slowed down considerably. In this environment the alliance is a new industrial model for aviation in India," said Naresh Goyal, chairman of Jet Airways.
"This is a quantum leap forward in the evolution of Indian aviation which will benefit customers through a comprehensive integration," added Vijay Mallya, chairman of Kingfisher Airlines.
Speaking to the media, Kingfisher promoter Vijay Mallya pointed out that it didn't really make sense for flights from both carriers to be touching down in London within 30 minutes of each other.
Both companies also said there will be huge cost savings for the airlines, but declined to provide details.
The Jet-Kingfisher alliance involves joint fuel management, ground handling, network rationalisation and crew sharing. It is also clarified that there would be no exchange of equity and both the airlines will maintain independent legal and brand entities.
Industry analysts point out that reduction in maintenance costs, at least, would be "minimal" as Jet has a largely Boeing fleet even as Kingfisher Airlines operates a largely Airbus fleet.
