Jet, Kingfisher unveil extensive alliance but no cross-equity

Source: Flightglobal.com
This story is sourced from Flightglobal.com

Indian carriers Jet Airways and Kingfisher Airlines are forging a tight co-operation pact which includes codesharing and joint operations, but stops short of cross-equity investment.

The agreement between the Mumbai-based airlines has been sealed as Kingfisher, in particular, battles to stem losses and reduce costs by cutting back its rapid expansion.

Jet and Kingfisher will codeshare on international and domestic services - subject to Indian regulatory approval - and re-organise their networks to exploit synergies. The joint network, operated by 189 aircraft, will cover 82 international and 927 domestic daily flights.

The carriers will cross-utilise crews on similar aircraft types and will also engage in joint fuel-management and common ground-handling to reduce expenditure. There will also be co-operation between the carriers' frequent-flyer programmes.

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While the two airlines will remain separate companies, they will examine whether there are opportunities for co-branding.

Jet says the proposed wide-ranging alliance is "in the national interest" and will "enable a stabilisation of the Indian aviation industry" during the current downturn.

"India has witnessed tremendous growth in the past which has slowed down considerably," says Jet chairman Naresh Goyal.

"In this environment the Jet Airways-Kingfisher alliance represents a completely new industrial model for aviation in India which would be based on an unprecedented depth of co-operation between the two companies.

"There will be huge cost savings and revenue enhancement opportunities arising from this alliance."

There will not be any mutual equity investment, state the carriers, but the pact is expected to improve service standards, lower costs and enable the companies to present passengers with the "best possible fares".

Kingfisher Airlines chairman Vijay Mallya says: "Both Jet and Kingfisher fully realise that better understanding of supply and demand in this capital- and labour-intensive industry is the key to profitability and enhancement of shareholder value."

He says the arrangement will deliver "superior quality, cost savings, flexibility and enhanced consumer value".

Jet and Kingfisher have established a joint committee of senior managers who will explore further initiatives and areas for closer co-operation.