Jet Airways scraps low-cost JetKonnect to plot revival plan
12 August 2014
Jet Airways chief Naresh Goyal on Monday said the airline has decided to scrap the low-cost JetKonnect and instead stick to a single brand while launching more international routes as it concentrates on full service operations.
Jet Airways, which did not report any annual profit since 2007, hopes the scraping of the low-cost brand JetKonnect to help it save costs further and help it emerge from the woods by 2017.
The company, which registered a lower net loss of Rs217.6 crore for the April-June 2014 quarter, is betting on more international services as a way to profitability.
"We as an airline confused customers (with multiple brands) ... The main aim in the tie-up will be to increase market share," Goyal said while addressing the media after the release of the company's first-quarter results.
Jet, which started off as a full service airline, ventured into low-cost carriers (LCCs) with JetKonnect. And, when Goyal bought Air Sahara in 2007 to add to the LCC business, it was called JetLite. With three services all called Jet, the company decided to merge JetLite and its own JetKonnect a single brand - JetKonnnect.
JetKonnect, which operates 11 aircraft, will now sport the main airline's branding, Goyal said.
James Hogan, chief executive of Etihad Airways, which owns a 24-per cent stake in Jet, said the airline's aircraft will now only have economy and business class seats but the airline's pricing will remain competitive despite the scrapping of the low-cost carrier.
The move is seen as part of a deeper engagement with partner Etihad Airways. Reports quoting Jet Airway's auditors had earlier suggested that the company's ability to continue as a "going concern" depended on deeper synergies and with Etihad Airways and airline's ability to raise funds.
Better synergy in operations and increased flow of funds would mean an increase in Etihad's stake in Jet Airways. Without this, the company is likely to be in deeper trouble.
Jet has been steadily losing domestic market share and could lose even the international traffic share unless it improves the operating environment ahead of the arrival of two new airlines on the scene.
Jet Airways has already acknowledged the fact that the "entry of new airlines will directly increase competition and will lead to more pressure on some routes".
"However,'' Jet Airways claims, ''steps have been taken to mitigate the impact on Jet." It did not elaborate.