Flying high: Jet, Etihad re-engineer tarmac

Jet Airways and Abu Dhabi-based Etihad Airways have outlined plans to reinforce their long-term commitment to the growth of India’s economy and aviation industry, including a major new turnaround strategy for Jet Airways to return to profitability in three years, it has been announced.

The two airlines have been codeshare partners since 2008 and their relationship was strengthened in November 2013, after Etihad Airways received approvals to acquire a 24 per cent stake in Jet Airways, marking it the first investment by a foreign carrier in India’s airline industry.

The wide-ranging partnership has numerous advantages for travellers, including enhanced connections across the world through an expanded codeshare agreement, reciprocal ‘earn and burn’ rights and tier level recognition on the JetPrivilege and Etihad Guest frequent flyer programmes, said a report.

Jet Airways and Etihad Airways also stand to benefit from cost savings and synergies in areas such as fleet acquisition, maintenance, product development and training, it said. They continue to explore collaborative purchasing opportunities for fuel, spare parts, insurance and technology support, it added. Supporting the partnership, the Jet Airways Board recently approved a three-year business plan to reshape the airline and secure its long-term future.

Optimise operations

The plan incorporates a series of critical measures for laying the foundations for a return to profitability, including long-term network, and fleet and product developments to optimise the airline’s domestic and international operations. Focus areas for international operations will include network developments, including new services to markets such as Europe, China, Australia and Southeast Asia, expanded frequencies to existing routes and additional codeshares.

Jet Airways’ two and three class aircraft product will also be enhanced and the seat count optimised on wide-body Boeing 777 and Airbus A330 aircraft, the report said. In addition, the domestic business model is aimed at improving connectivity across India and worldwide, while removing complexity in product and fleet, including the standardisation and reconfiguration of the Boeing 737 fleet.

To initiate the three-year turnaround plan, the Jet Airways Board and management team have already worked with auditors to clean up its balance sheet and write down overvalued non-cash assets. Jet Airways has announced a new team at the helm with Cramer Ball as its new Chief Executive Officer and Subodh Karnik as the Chief Operating Officer pending regulatory approval.

Ball 46, an Australian national, is a certified accountant and an accomplished airline executive with extensive experience in the aviation industry. Karnik brings with him rich experience in the aviation sector, leading and assisting airlines in fleet and network planning, global alliances, joint ventures and improving overall efficiencies at international airlines.

Jet Airways Chairman Naresh Goyal said that the coming together of Jet Airways and Etihad Airways has already proved a success for the two airlines and, importantly, has been beneficial for travellers, and will also bring significant benefits to the Indian economy, both in terms of growth, job creation, trade and tourism.

“However, the market has been challenged by factors such as a difficult economic climate, volatile fuel prices, and the rapid growth of low-cost carriers in India. Tough measures were needed to ensure Jet Airways’ long-term future, maximise its partnership with Etihad Airways, and enhance the benefits this partnership offers to passengers,” the report quoting him to say.

“Our international operations are already profitable and contribute 45 per cent to our total revenue. We will continue to build on this strong foundation as part of our three-year turnaround plan and increase this contribution to 63 per cent by 2015.

“At the same time, we will address challenges in the domestic market with a model that removes complexity in our fleet, product and brand. This is not a short-term strategy, but we are optimistic about the future and confident about achieving the intended results,” Goyal said.

Considerable opportunities

Etihad Airways President and Chief Executive Officer James Hogan, said: “India represents a considerable opportunity for airlines worldwide, with more than 42 million international travellers reported last year and impressive future growth rates predicted by IATA.

“The Etihad Airways and Jet Airways partnership has significantly improved connectivity between India and the UAE, and through our combined network and codeshare partnerships with other airlines. The improved connectivity has also enabled the Indian public convenient access to destinations across the Gulf region, Middle East, Africa, Europe and North America,” the report quoted him to say.

“We are also bringing more travellers from these destinations to India, supporting the country’s aviation industry and economy.” Etihad Airways, which celebrates the 10th anniversary of its inaugural flight to India this September, currently operates 112 flights per week to 10 Indian destinations”, he said.

During the first half of 2014, more than 621,000 people travelled on the airline’s India services, representing an impressive growth rate of 51 per cent in comparison to the same period last year, the report said. Last month, the airlines announced a significant expansion of their codeshare agreement, after obtaining regulatory approval to codeshare on 43 additional routes, bringing the total number of services in their codeshare agreement to 71.

Under the development, Etihad Airways placed its ‘EY’ code on domestic services in India for the first time, with the codeshare agreement now including 31 Jet Airways routes from hubs in Mumbai, Delhi, Chennai and Bangalore to regional centres in Ahmedabad, Amritsar, Goa, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mangalore, Patna, Thiruvananthapuram and Vadodara.