In a clear sign of how tough airline operating conditions have become in India, rival carriers Jet Airways and Kingfisher Airlines are entering a radical partnering alliance they declare is necessary for the viability of India's domestic air transport market.

Jet and Kingfisher are the country's two largest airline groups, together accounting for around 60% of domestic market share. They have been bitter rivals, but last week they announced a wide-ranging partnership that will see them codesharing on domestic and international flights as well as interlining. They have also agreed to jointly manage fuel purchases, join forces in ground handling, integrate and rationalise their respective networks, link frequent flyer programmes and share flightcrews.

Until a few months ago such a partnership would have been unthinkable. Jet is owned by billionaire Naresh Goyal while Kingfisher is controlled by another billionaire, Vijay Mallya, and the two have not been on friendly terms.

Kingfisher A340-500

But their airlines have seen losses balloon in recent months, as costs have gone up in the Indian market and demand has fallen, after several years of aggressive growth. Collectively, India's airlines are expected to lose up to $2 billion this year.

The two carriers say they expect to save as much as Rp15 billion ($310 million) by sharing resources and eliminating duplication. They insist that no equity links are planned, however. The country's civil aviation minister Praful Patel, has given his qualified backing to the tie-up.

Jet is meanwhile scrapping expansion plans and in the winter schedule will operate 15% fewer flights than originally planned. Both Jet and Kingfisher are trying to return aircraft to lessors.

Jet separately announced last week that 1,900 employees would lose their jobs, representing 15% of its total workforce, although it later said it had decided against it. The reversal followed public opposition from politicians.

Source: Flight International