Jet-Kingfisher deal scares many

The alliance between full service carriers Jet Airways and Kingfisher Airlines, commanding about 60 per cent of market share, is expected to hurt low-cost airlines, travel agents, private airport companies and air travellers.

Smaller low-cost carriers (LCCs) fear that they might be pushed out of premium slots for their flights by the JetLite and Kingfisher Red duo, while private airport companies feel that the combine could pressurise them to reduce airport charges, which they have resisted so far.

"If there is a revised schedule which keeps their slots very close to ours, there are fears that they might try to push LCCs away from the market," said a SpiceJet executive, who didn’t want to be named.

Experts also said that low-cost carriers may lose corporate travellers, who now constitute more than 5 per cent of their customer base, as they would get better frequent flier offers from the combine.

Travel agencies see the possibility of the alliance forcing them to strictly implement the zero commission rule introduced earlier. Consumers, of course, have to face the spectre of increased fares.

"We have to keep a close watch on this alliance, but in terms of control over the market, it does seem like a very scary situation," said Ajay Prakash, General Secretary, Travel Agents Federation of India (TAFI).

The alliance accounts for more than 80 per cent of the commission earned by travel agents from the domestic carriers.

For instance, travel portals such as Yatra's business might get squeezed. "This will lead to a reduction in capacity. Lesser volumes mean lesser margins. Also the rule of the market is that there should be a lot of competition," said Dhruv Shringi, co-founder and CEO of yatra.com, referring to the fact that the alliance will kill a lot of competition.

With route rationalisation, it is likely that passengers will have to pay more. "The corporate traveller will see benefits since he will get a lot of options when code shares and flight exchanges take place. However, fares offered by Jet and Kingfisher will go up by 15 per cent," said Kapil Kaul, CEO (Indian subcontinent), Centre for Asia Pacific Aviation (CAPA).

Even airport infrastructure companies fear that the two might collectively bargain for lower airport service charges. "We are meeting the airlines soon to discuss the contours of the alliance and what it means for airport slots," said Andrew Harrison, CEO, Delhi International Airport Ltd (DIAL), while confirming fears that they might try to dictate terms having control of majority of the slots in metro airports such as Delhi and Mumbai.