Jet-Kingfisher tie-up still to show fruits

Singapore
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More than four months after India's Jet Airways and Kingfisher Airlines announced plans for a wide-ranging alliance, little apparent progress has been made on the tie-up - but the would-be partners insist they remain committed to it.

Kingfisher chairman Vijay Mallya says the two are still committed to an alliance and it will take until around the middle of this year for it to become fully operational. Mallya told local media that the two airline groups are already co-operating "very closely in many ways", although he did not provide specifics.

From the passenger's standpoint there is no visible partnership between the two airlines yet, however, and airline sources admit that little progress has been made in most areas. Publicly, though, both Kingfisher and Jet say they aim to see it go ahead and management committees are in regular discussions.

The two announced the alliance in October, saying it would cover codesharing on domestic and international flights as well as interlining. They also agreed to jointly manage fuel purchases, join forces in ground handling, integrate and rationalise their networks, link frequent-flyer programmes and share flight crews.

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The airline groups are the two largest in India, commanding a combined 57% of the domestic market in terms of passenger numbers in 2008.

Industry watchers were taken by surprise when their tie-up was announced, as the two are arch rivals and there had been little love lost between the high-profile owners of the two airlines, billionaires Mallya of Kingfisher and Naresh Goyal of Jet.

Their alliance plans were announced as India's airline sector was facing the most difficult times following several years of growth, as a result of widespread overcapacity, a drop in demand following ticket-price hikes and increased costs.

Kingfisher said at the time that it had shelved plans for an expansion of its fledgling international network and would only retain services to London Heathrow.

But it later secured new international rights from the Indian government which it must exercise soon or lose, and as a result it has gone public saying it will roll out several new international routes in the coming months. It says it is looking at adding services to Bangkok, Dhaka, Dubai, Hong Kong, Kuala Lumpur and Singapore. It has already added Colombo in Sri Lanka as its second international destination after London.

Jet, meanwhile, says that things appear to be picking up somewhat, as it has boosted international operating margins after reducing loss-making services and leasing out surplus aircraft to other airlines. On the domestic front it expects capacity to be flat for the next few quarters which should result in improved load factors.