Jet Airways considers merging its two fleets

Jet Airways (India) Ltd might merge the Jet Konnect (JetLite) fleet with its own under a single operating permit to improve efficiency. This is one of the options under consideration as part of restructuring Jet Konnect, the airline’s no-frills brand.

Jet Airways acquired Air Sahara in 2007 and rechristened it as JetLite. The brand name, JetLite, was dropped last year while keeping two service models intact — a full service model and a no-frills model (Jet Konnect).

The airline uses a mix of aircraft from both Jet Airways and JetLite fleets for its no-frills service. JetLite is run as a separate subsidiary and has a separate operating permit. JetLite’s schedule is filed separately with the Directorate General of Civil Aviation and its 15 Boeing 737s are not used for Jet Airways operations.

The airline is exploring the idea of transferring aircraft from one fleet to another with a view to improve efficiency, a source said. Currently, Jet Airways uses 54 Boeing 737s and 18 ATR turbo prop planes for its domestic operations.

No decision has been taken yet. Other plans under consideration include dropping no-frills Konnect brand altogether and using the entire JetLite fleet for the full service model. This would mean passengers will get free meals and better mileage points for their trips. It is said the change is being driven following Etihad’s decision to acquire 24 percent equity in Jet Airways and Jet’s offering is being aligned with Etihad service. Another plan is to continue with both full service and no-frills service models. The airline is also toying with the idea of increasing the number of business class seats (at present eight each) in JetLite-registered planes, while retaining both the service models.

The airline had hinted at restructuring Jet Konnect operations while announcing its June quarter results. In the notes accompanying the profit and loss statement, the airline said it was in the process of revisiting the business model of the subsidiary. An airline spokesperson refused to respond to an email query on the issue.

In its Q4 result announcement the airline had also announced commissioning of ten year network study to identify long term footprint and future capacity deployment. It also said it commissioned a market research to assess the growth potential. A senior official said the study will be used to formulate new strategy for its no frills brand and denied there was a plan to scrap the no frills offering.

At present JetLite has a market share of around 7% and the reason it has not grown beyond that is because no capacity addition has been made to the JetLite fleet in the last few years. The 46 Boeing 737s which are on order and due to be delivered over the next two-three years will be joining the full service fleet.

Industry experts and sources say that retaining two service models has created a brand confusion which is impacting Jet Konnect. "The bottom line is to have one product and one service standard to be aligned with Etihad,'' a source said.

In FY 13 JetLite posted a loss of Rs 295 crore (Rs 184 crore loss in previous year) and showed a negative growth in other operating parameters such as departures, deployed capacity, capacity utilisation, load factor and number of flown passengers.

Analysts have been critical about Jet Airways twin brand offerings In a post Q1 result analysis Kapil Kaul of Centre for Asia Pacific Aviation said Jet has an unviable domestic business model and expects the airline to under perform until there is a turn around in domestic operations.