Jet Airways flying in turbulent times

05 September 2006

It''s a hard fight for a larger slice of the pie in the sky. And Jet Airways seems to be at the receiving end. It''s sandwiched between competition from Kingfisher, which has introduced in flight entertainment and no frills carriers, which seem to be weaning passengers away from it.

So, Jet will now offer in flight entertainment too. In a year, all its new 737-800 aircraft will have it. Besides, it also introduced internet check-ins and a more agressive loyalty programme. And to deal with the no-frills threat, it''s discounting fares. It offers 65 per cent of its tickets at a discount, against 50 per cent last year.

"For certain number of flights where there is no business class or premier demand at all, we may look at one or two economy flights but this will only be on a vey limited basis," said Wolfgang Prock-Schauer, CEO at Jet Airways.

Besides, cost-cutting and a recruitment freeze might help ease the pressure on margins. Like the rest of the industry, it is plagued by rising fuel costs and infrastructure constraints.

"In domestic Indian market there''s 50 per cent more capacity than one year ago and underlying growth is something like 20- 30 per cent. If there is overcapacity in the market, then seats have to be sold at lower discounted price and that for industry as a whole would make the yeild go down," said Wolfgang Prock-Schauer, CEO, Jet Airways.

Experts estimate industry losses at Rs1,800 crore for 2006-07. Jet says the sector''s revenue erosion will continue until airlines consolidate. But before that, analysts expect a crash or two.