Jet propelled into action

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India's second biggest domestic airline, Jet Airways, is shedding long-time equity partners and forging links with new allies, as well as gearing up to take on rivals Air India and Indian Airlines on international services.

It's all change as far as Jet's partners are concerned. Middle East operators Gulf Air and Kuwait Airways are out, at least in terms of their respective 20 percent shareholdings. The partners were forced to withdraw their stakes following confirmation of the Indian government's refusal to allow foreign carriers to hold any financial interest in local airlines.

As Jet's equity partners exited, Northwest Airlines made its entrance, sealing an extensive cooperative marketing agreement with Jet in mid-October. The deal puts the Indian airline firmly in the Northwest/KLM camp - Jet already cooperates with Northwest's alliance partner, KLM. Both KLM and Northwest are coordinating their schedules to link with Jet Airways' domestic flights from Delhi and Mumbai to 18 other Indian cities. Northwest launched services from Amsterdam to Delhi and Mumbai on 1 October.

Gulf Air and Kuwait Airways had been holding out in the hope of a government change of heart that would allow them to retain their stakes in Jet. However, they finally decided in October to sell their combined 40 percent in stock to Jet Airways chairman, Naresh Goyal. Each of the 20 percent stakes was thought to be worth around US$4 million.

Both Middle East carriers have stressed they intend to continue to cooperate closely with Jet in various areas, including commercial and technical operations.

Jet is also attempting to increase the number of its own offshore destinations. The carrier is seeking government clearance to operate to Malaysia, Indonesia and Singapore, using its fleet of 12 Boeing 737-400s and -500s, Delhi sources say.

Meanwhile, India's Ministry of Civil Aviation was preparing to hand over the results of an intensive review of the country's aviation policy to the government. Some aspects of liberalisation have been fiercely criticised since domestic deregulation in 1992, including heavy taxes on airlines, particularly for fuel, and limits on the operation of startup airlines.

Of some 20 startups launched since deregulation got underway only a handful have survived, with Jet Airways the most successful.

Government officials suggest the policy review could be cleared before the end of the year but analysts believe this is unlikely, given the highly controversial nature of the issue.

Tom Ballantyne