Indian Airline NEWS: Jet Airways may join SkyTeam or Star Alliance

The country’s largest airline by passengers carried, Jet Airways (India) Ltd, plans to join international airline groupings SkyTeam or Star Alliance. The airline is also considering rebranding its low-cost carrier JetLite.

Jet, with a 115-aircraft fleet, has been expanding overseas since 2007 and an alliance with one of these groupings would help it grow its reach and revenue by about 5%, according to analysts.

The choice is limited though. Of the three global alliances, Air India is integrating into Star, the biggest, this year, and Kingfisher Airlines is joining OneWorld.

The aviation ministry does not want two major airlines in the same alliance, which would leave SkyTeam as Jet’s only option.

“OneWorld is already with (Kingfisher) so its has to be between Star and SkyTeam,” Jet Airways chairman Naresh Goyal said last week on the sidelines of a conference marking 100 years of flight in India. “But we are not in a hurry. Emirates has not joined any alliance, has it?”

Jet connects to 24 international cities, second only to Air India’s network, and has been stitching code-share agreements with international carriers to increase its reach.

While Goyal says Star is an option, the aviation ministry is opposed to that move, at least for now. “We can’t allow two carriers into an alliance. They will eat into each other’s market and cannibalize it,” said a ministry official who declined to be named.

If Air India and Jet both join Star, the national flag carrier’s negotiating power on ticket prices with alliance members such as Lufthansa may decline as there will be two carriers from the same country, the official said.

In December, the Mumbai-based Jet started flights to Milan from Delhi, a sector vacated by a loss making Alitalia in 2008, and entered into a understanding with the Italian carrier for handling its flights.

Alitalia is a SkyTeam member and 25% controlled by another SkyTeam member Air France-KLM.

Italy was the first new front Jet opened in Europe after it made Brussels its European hub way back in 2007.

The aviation ministry official said the government is modifying a bilateral agreement between India and Italy to allow Jet to sign a domestic code share agreement with Alitalia.

Such an agreement will allow Jet to book passengers on the Delhi-Naples route, flying them on its aircraft till Milan and on Alitalia from there.

This month, Jet also won rights from the aviation ministry to expand further into what are considered SkyTeam hubs in Europe. It secured, as Mint reported on 23 January, rights to fly to Rome and Amsterdam from Mumbai in the coming winter.

“Jet is clearly joining SkyTeam since FCO (the Rome airport code) and AMS (Amsterdam) are Alitalia and KLM hubs. Jet can (fly to) Britain (excluding London) via AMS and other cities in southern Europe via FCO or MXP (Milan airport),” said a London-based analyst who tracks the airline closely, but declined to be named as he is not authorized to speak to the media. Jet already flies direct to London using Boeing 777s.

“They will also start flying to CDG (Paris airport and a large SkyTeam hub). I expect Jet will pull out of BRU (Brussels) soon and use MXP as their scissor hub,” he said.

Jet did indeed request the aviation ministry last year to be allowed to fly to Paris from the winter of 2011, but that route was kept in abeyance by the ministry. Air India already flies the Delhi-Paris route.

The airline can benefit from being a a dominant carrier in SkyTeam as it doesn’t have any major member airlines in West Asia and Southeast Asia, where Jet has a presence since it has been increasing frequencies to these regions since 2007. The two airlines in these regions who are slated to be part of SkyTeam include Saudi Arabian Airlines and Indonesia’s Garuda.

Goyal, who controls about 80% of Jet Airways through Isle of Man-based firm Tail Winds Ltd, also said the airline plans to rebrand its budget subsidiary JetLite as JetKonnect to lift the carrier’s image and positioning.

He, however, denied the airline was in talks with French aircraft maker Airbus SAS to refurbish JetLite’s fleet with Airbus A320 aircraft or the newer version of fuel-efficient Neos that will debut in 2016.

“We are with Boeing,” he said, referring to Jet’s fleet being dominated by the American-made Boeing 737s.

NEHA JAIN

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