Jet Airways plans to wet lease seven ATR-72 planes to TruJet to cut down on costs. Under a wet lease, a lessor provides pilots, maintenance, cabin crew and aircraft to a lessee. The move will result in a reduction of flights and a loss of domestic market share for Jet (currently at 15.5 per cent) but will help TruJet with short-term capacity addition without worrying about a pilot shortage.
While the two firms have been in discussions since last year, the two sides agreed in principle on a wet lease agreement recently. Since the ATRs are not owned by Jet, getting a nod from the original lessor was also required for the sublease arrangement. A formal agreement is expected to be signed later this month. Jet has 121 planes including 18 ATR-72s.
According to sources, Jet will begin wet leasing from September. These will remain in TruJet’s fleet for 18-24 months by when the original lease terms will end. “We are in a quiet period and unable to respond to your query,” a Jet spokesperson said in an email response.
For Jet, the urgency of concluding lease agreements will be vital. The airline has been struggling to make money and is under pressure to control its costs. TruJet, which has five ATRs, has been unable to expand rapidly due to a shortage of pilots. A wet lease agreement will address it. The partnership will not be restricted to leases. TruJet, which is also stitching a commercial co-operation agreement with Jet, will align its network to feed Jet flights. The two sides will also explore a codeshare pact.
Incidentally, TruJet senior leadership now comprises of two former senior Jet executives. K G Vishwanath, who headed investor relations in Jet, is a CFO, while Sudheer Raghavan, who was its chief commercial officer, is looking after commercial matters at the regional airline. Vishok Mansingh, who has worked in Kingfisher Airlines and Blue Dart, took charge as TruJet CEO last October after Megha Engineering and Infrastructure bought the airline.
TruJet operates 32 daily flights and plans to increase it to 48 over the next few months. It also plans to add bases in Guwahati and Ahmedabad.
“The wet lease will help TruJet in its short-term capacity requirements and in reducing losses. Jet has a very high-cost structure and with yields under pressure, it has been unable to make money on the ATR services,” an analyst said.