Airlines Deals

Price war in the Indian skies has taken its toll on market leader Jet Airways, which suffered a net loss of Rs 45 crore during the first quarter of current financial year, despite clocking a 25 per cent increase in revenue at Rs 1,680 crore.
Announcing results for the April-June quarter, a day after its Chairman Naresh Goyal received the Best Aviation Company NDTV Profit Award from Prime Minister Manmohan Singh, Jet said its overall financial performance was impacted by factors including “continued yield pressure in our domestic and international operations and an increase in fuel and other input costs”.

However, the premier private carrier reported pre-tax profit on domestic operations of Rs 11.8 crore.

“Loss before tax in our start-up international operations of Rs 71.3 crore resulted in an overall loss before tax for the company of Rs 59.5 crore in the quarter”, the airline said.

The airline said all its international routes were profitable, barring the London sector.

“We are addressing our London route profitability through a combination of passenger and cargo sales initiatives and network partnerships with other established airlines”.

Jet said the introduction of the second daily Mumbai-London flight completed its product offering on this sector, with convenient connections to Europe and North America as also the domestic network.

The other global routes the airline operates are Colombo, Kathmandu, Singapore and Kuala Lumpur.

The airline said the near-term outlook also remained difficult, despite the continuing growth of domestic and international traffic.

It said comprehensive profit enhancement programme was being executed through a combination of revenue enhancement measures like better yield management, higher cargo revenues and controlling costs, especially in the personnel, sale and distribution.

Maintaining that induction of high-salaried staff like pilots and engineers, including expatriates, along with a hike in staff training costs and normal annual wage increases had raised costs substantially, it said strict controls on all non-operational related recruitment were being implemented.

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Price war in the Indian skies has taken its toll on market leader Jet Airways, which suffered a net loss of Rs 45 crore during the first quarter of current financial year, despite clocking a 25 per cent increase in revenue at Rs 1,680 crore.

Announcing results for the April-June quarter, a day after its Chairman Naresh Goyal received the Best Aviation Company Award from Prime Minister Manmohan Singh, Jet said its overall financial performance was impacted by factors including “continued yield pressure in our domestic and international operations and an increase in fuel and other input costs”.

However, the premier private carrier reported pre-tax profit on domestic operations of Rs 11.8 crore.

“Loss before tax in our start-up international operations of Rs 71.3 crore resulted in an overall loss before tax for the company of Rs 59.5 crore in the quarter”, the airline said.

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Network Advertising, Mumbai, has formally resigned from the Jet Airways business. It had been handling the creative and media duties for the airline brand since the past six years. As per certain industry sources, the size of the business is around Rs 50 crore, including both the brand’s domestic and international spends.

However, the agency has clarified that there are no specific problems/issues involved, and it was an amicable, mutual decision by both the client and the agency to part ways after six years of their association.

Vinod Nair, managing director, Network Advertising, says, “It has been a great journey with Jet Airways over the past six years. We are quite pleased about our role in making the Jet Airways brand what it is today.”

The end of this relationship indicates that Jet Airways will perhaps be on the lookout for a creative/media agency.

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A Jet Airways flight from Mumbai was hit by a bird but landed safely at the city airport this morning, a senior police officer said.

The incident was noticed by authorities only after the Mumbai-Indore flight landed safely and they spotted the minor damage caused to the plane, City Superintendent of police (airport area) B J Salunkhe told PTI.

The authorities decided to cancel the flight and have arranged for another flight, he said.

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Smarting from a failed bid to takeover Air Sahara, Jet Airways has said it had no plans to acquire any other airline.

“We have no plans to acquire any other airlines. We will stand at our level and go alone,” Jet Airways CEO Wolfgang Prock-Schauer said.

Jet Airways’ Rs 2,300 crore deal to take over Air Sahara collapsed in June for want of regulatory approvals.

It has subsequently sparked a legal battle between the two carriers.

Fleet expansion

Prock-Schauer, who was here to announce the launch of services between Amritsar and London from August 4, said that the airline would expand its fleet to 90 aircraft by next year from the present fleet strength of 43.

“The thrice a week service, to be operated with new leased Airbus aircraft, will be a direct flight between Amritsar and the UK,” he said.

He also said that the Jet Airways plans to fly to US from the summer of 2007. But the airline is yet to secure Washington’s permission to operate services to that country.

Jet Chairman Naresh Goyal added that passengers on the Amritsar-London sector could avail of an introductory companion free offer in the premiere class.

The offer is valid from July 21 to August 31, he said. The airline is also offering special economy class fares starting from Rs 17,000 to Rs 25,000 in the sector till August 15.

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Smarting from a failed bid to takeover Air Sahara, market leader Jet Airways today said it had no plans to acquire any other airline and preferred to go it alone.

“We have no plans to acquire anyother airlines. We will stand at our level and go alone,” Jet Airways CEO Wolfgang Prock-Schauer told reporters here.

Jet Airways’ 500 million dollar (Rs 2,300 crore) deal to take over the Air Sahara collapsed in June for want of regulatory approvals and has subsequently sparked a legal battle between the two carriers.

Prock-Schauer, who was here to announce the launch of services between Amritsar and London from August four, said that the airline would expand its fleet to 90 aircraft by next year from the present fleet strength of 43.

“The thrice a week service, to be operated with new leased Airbus aircraft, will be a direct flight between Amritsar and the UK,” he said.

He said that the airways plans to fly to US from the summer of 2007. But the airlines is yet to secure Washington’s permission to operate services to that country.

Jet Chairman Naresh Goyal said passengers on the Amritsar-London sector could avail of an introductory companion free offer in the premiere class.

The offer is valid from July 21 to August 31, he said.

The airline is also offering special economy class fares starting from Rs 17,000 to Rs 25,000 in the sector till August 15.

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Jet Airways, India’s premier airline, will launch its new international flight linking Amritsar with London, making it the first Indian carrier to provide a direct service between the Holy City to the United Kingdom.

The thrice a week service will be operated with a brand new leased Airbus A330-200 aircraft on Fridays, Saturdays and Sundays from August 4 onwards. Flight 9W 124 will depart from Amritsar at 1425 hrs and reach London’s Heathrow airport at 1905 hrs (Local Time) the same day. The return flight 9W 123 will depart from London at 2235 hrs (Local Time) and arrive at Amritsar at 1135 hrs, the next day.

This direct service to London, will be the fourth non-stop flight operated by Jet Airways from India to London. The airline already operates two daily flights between Mumbai and London and one daily flight between Delhi and London, Mr Wolfgang Prock Schauer, Chief Executive Officer (CEO) of Jet Airways announced at a media briefing here on Wednesday.

As part of its inaugural offer, Jet Airways is introducing a special Companion Free Offer in the Premiere Class. This offer is valid till August 31 and outbound travel must commence on/before August 31. Both fare paid and companion passenger must travel together for the outbound sector.

For travel in the economy class, Jet Airways is also offering special fares ranging from Rs 17,000 to Rs 25,00 (excluding taxes) until August 15. To avail this offer, outbound travel must commence between August 4 and September 30, subject to certain terms and conditions.

The aircraft’s InFlight Entertainment (IFE) systems and content onboard the A330-220 aircrat will offer three Punjabi movies, one Punjab sitcom and a compilation of Punjabi Music Videos.

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Air Deccan and Jet Airways have signed an agreement to accomodate each-other’s passengers, in the event that any of their own flights gets cancelled in the last minute, reports CNBC-TV18.

It is interesting to see that the competitors in the air are really cooperating on the ground. Air Deccan and Jet Airways have got into an agreement, whereby if there is a last minute cancellation of either flights, then the passengers could be accommodated.

Now, there are couple of advantages to this. One is that it increases their load factors in case of a cancellation. It also gives Air Deccan a lot of credibility being associated with Jet. So it is a win-win situation for both of them.

It is learnt that going forward, they are looking at other areas of cooperation. For instance, they are saying that they may look at the inter-lying arrangement, where Jet may sell tickets from London to smaller cities, where Air Deccan flies. So passengers can be transported from Deccan to Bombay or Delhi from where Jet Airways can fly to London.They are also looking at resources sharing at the ground level.

But of course, these two agreements are still some time away. The only agreement that they have signed currently is in case of last minute cancellations of flights.

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Low-cost carrier Air Deccan has signed a strategic alliance with private airline major Jet Airways for code sharing, pooling engineering resources and accommodating passengers in case of flight cancellations.

The alliance would enable a passenger to book a ticket from London to fly to Kolhapur, where Jet Airways is not flying. The first leg of the travel, London to Mumbai would be in Jet while the second leg would be in Air Deccan from Mumbai to Kolhapur.

“This will help Jet Airways to fill up seats and take on competition posed by Air-India, British Airways, bmi and Virgin Atlantic. For Air Deccan, it will help in filling in seats and revenue generation,” said industry analysts.

Air Deccan MD G R Gopinath confirmed the development adding, “Jet Airways and Air Deccan will pool engineering resources also to streamline operations and bring down operating costs'’.

As a result of this alliance, passengers of a cancelled (or delayed) flight can be accommodated in the other airline for a standard rate based on the duration of flights and the number of passengers.

Air Deccan is currently operating 265 daily flights covering 55 airports while Jet Airways is flying to 48 destinations with 320 flights a day.

Industry analysts pointed out this strategic arrangement is going to benefit both airlines mutually “as the cancellations and delays are at equal level for Jet Airways and Air Deccan.”

“This will also put an end to the chaos at airports arising out of flight cancellation of any these operators. Several times severe pilot shortages are leading airlines to cancel the flights. To an extend, this arrangement will mitigate these risks,” they added.

Jet Airways is operating 43 classic and next generation B 737-400/700/800/900 aircraft, three Airbus A34-300, one Airbus A330-200 and eight modern ATR 72-500 turboprop.

Air Deccan is operating 14 Airbus A320 and 21 ATR turboprop aircraft. The scrip of Deccan Aviation, promoter of Air Deccan, rose 14.46 per cent on the BSE at Rs 74 against previous day’s closing of Rs 64.65.

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Jet Airways plans to operate regular flights to China and the US and increase daily flights between India and Britain to around nine in due course, chairman Naresh Goyal has said.

“We are looking at China, the US. We plan to start Zurich, Munich, Frankfurt, Rome and Milan,” Goyal said in an interview published in the ‘’Guardian'’ on Friday.

He said Jet has already added routes to Colombo, Singapore, Kathmandu and Kuala Lumpur.

“I would like to see in the next two, three years that we build eight, nine flights a day to the UK. We want to operate to Manchester, Birmingham, Glasgow and we are looking at Gatwick,” Goyal said.

He said there are 1.4 million Indian-origin people living in Britain and the Civil Aviation Authority expects 1.5 million people to fly from Britain to India this year, nearly three times the number five years ago.

“The UK is a natural (destination) because of the Indians living here. We know the market. There is an automatic affinity,” he said.

The 57-year-old Goyal said many of the estimated 28 million Indians living overseas already know about his airline.

But the company wanted a wider audience and had hired design agency Landor Associates to work on the brand, he said.

“We not only want Indians, we also want English, Europeans living here (to travel by Jet Airways)… We want to be one of the best five airlines in the world,” he added.

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