Jet Airways bets on business class again

Increases seats in the premium segment, scraps loss-making domestic flights

Jet Airways, the second-largest domestic airline by passenger volume, is gearing up for the competition from Tata-Singapore Airlines’ full-service airline.

For one, it is reconfiguring its Boeing 737 fleet to add extra business class seats. Besides, the airline plans to cut down flights on certain loss-making domestic routes; it will stop three daily flights to Bhubaneswar to cut losses. The airline’s consolidated loss for the second quarter stood at Rs 998 crore, its worst-ever. Jet Airways and its subsidiary JetLite have 70 narrow-body Boeing 737s of different variants and are flown on domestic, Gulf and south-east Asian routes.

Thirteen aircraft from JetLite fleet and a few from Jet Airways have eight business class seats each. These planes will be reconfigured to add four more business seats each. At present, a few Boeing 737s have 16 and 28 business class seats.

Breaking even
The reconfiguration exercise will happen over the next few months, as the airline expects demand in the business-class segment to grow and load factor to improve thanks to the seasonality factor. The move will also lead to improvement in yields as a business-class ticket is priced four times higher than an economy-class ticket. The airline has been unable to achieve break-even in the past six months as fares were too low to recover operating costs. Increasing the number of business class seats will help raise the revenue, which has remained flat in the past two quarters.

Jet Airways has a market share of 24.6 per cent. Following the collapse of Kingfisher Airlines, it has consolidated in the premium travel segment. However, passenger growth has remained subdued and the load factor in September was below 70 per cent.

“It is difficult to fill up even economy class seats; so, filling up business class will be a challenge,” an aviation expert remarked.

The competition is also set to increase when the Tata-Singapore Airlines starts operations. The Tata group airline hopes to start services by next May-June and is awaiting regulatory clearance.

A Jet Airways spokesperson did not respond to an email query on the issue.

Bhubaneswar flight
While a senior Jet executive said the airline will take a decision next week on its Bhubaneswar flights, an Airport Authority of India official said the airline would withdraw flights from October 27. The flights to Bhubaneswar are not displayed on the airline’s website, too. The Odisha capital is linked to Mumbai, Bangalore and Kolkata.  Other than flights to Bhubaneswar, the frequency of flights to some other cities, too, is being curtailed.

Jet Airways earns about 40 per cent of the revenue from domestic operations but the domestic network contributed to over Rs 600 crore of the consolidated loss in the second quarter of FY14. While the average revenue per passenger declined, unit costs were much higher than the year-ago period.