Jet Airways strategy to return to profitability in 3 yrs

Thursday, Jul 24, 2014,19:05 IST By metrovaartha A A A

Jet Airways and Etihad Airways, have outlined plans to reinforce their long-term commitment to the growth of India’s economy and aviation industry, including a major new turnaround strategy for Jet Airways to return to profitability in three years.    Etihad Airways received approvals to acquire a 24 per cent stake in Jet Airways, marking it the first investment by a foreign carrier in India’s airline industry.    Both the companies jointly began their campaign ‘Flying India Forward’ from july 24, company sources informed.    The wide-ranging partnership has numerous advantages for travellers, including enhanced connections across the world through an expanded codeshare agreement, and reciprocal ‘earn and burn’ rights and tier level recognition on the JetPrivilege and Etihad Guest frequent flyer programs.    Jet Airways and Etihad Airways also stand to benefit from cost savings and synergies in areas such as fleet acquisition, maintenance, product development and training, and continue to explore collaborative purchasing opportunities for fuel, spare parts, insurance and technology support.    Supporting the partnership, the Jet Airways Board recently approved a three-year business plan to reshape the airline and secure its long-term future. The plan incorporates a series of critical measures that lay the foundations for a return to profitability, such as long-term network, fleet and product developments to optimise the airline’s domestic and international  operations.    Focus areas for international operations will include network developments, including new services to markets such as Europe, China, Australia and Southeast Asia, expanded frequencies to existing routes and additional codeshares. Jet Airways’ two and three class aircraft product will also be enhanced and the seat count optimised on wide-body Boeing 777 and Airbus A330 aircraft.    In addition, the domestic business model will improve connectivity across India and worldwide, while removing complexity in product and fleet, including the standardisation and reconfiguration of the Boeing 737  fleet.    Jet Airways has announced a new team at the helm with Cramer Ball as its new Chief Executive Officer and Subodh Karnik as the Chief Operating Officer pending regulatory  approval.    Chairman of Jet Airways, Mr Naresh Goyal  said The coming together of Jet Airways and Etihad Airways has already proved a success for the two airlines and, importantly, has been beneficial for travellers, and will also bring significant benefits to the Indian economy, both in terms of growth,  job creation, trade and tourism.    However, the market has been challenged by various  factors.    He said adding Our international operations are already profitable and contribute 45 per cent to our total revenue. We will continue to build on this strong foundation as part of our three-year turnaround plan and increase the contribution to 63 per cent by 2015.    At the same time, we will address challenges in the domestic market with a model that removes complexity in our fleet, product and brand. This is not a short-term strategy, but we are optimistic about the future and confident about achieving the intended results.

Etihad Airways, which celebrates the 10th anniversary of its inaugural flight to India this September, currently operates 112 flights per week to 10 Indian destinations. During the first half of 2014, more than 621,000 people travelled on the airline’s India services, representing an impressive growth rate of 51 per cent in comparison to the same period last year.    James Hogan, President and Chief Executive Officer of Etihad Airways, said India represents a considerable opportunity for airlines worldwide, with more than 42 million international travellers reported last year and impressive future growth rates predicted by IATA.    The challenge is ensuring that our industry is efficiently catering to rising demand, not only in India’s major destinations, but also smaller cities that remain largely unconnected and underserved.    The Etihad Airways and Jet Airways partnership has significantly improved connectivity between India and the UAE, and through our combined network and codeshare partnerships with other airlines, the Indian public has convenient access to destinations across the Gulf region, Middle East, Africa, Europe and North America.    We are also bringing more travellers from these destinations to India, supporting the country’s aviation industry and economy, Mr Hogan said.
Under the development, Etihad Airways placed its ‘EY’ code on domestic services in India for the first time, with the codeshare agreement now including 31 Jet Airways routes from hubs in Mumbai, Delhi, Chennai and Bangalore to regional centres in Ahmedabad, Amritsar, Goa, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mangalore, Patna, Thiruvananthapuram and Vadodara.
Jet Airways flights are also included between Abu Dhabi and Bangalore, Chennai, Cochin, Delhi, Mumbai and Hyderabad, and Etihad Airways flights between Abu Dhabi and Ahmedabad, Bangalore, Chennai, Hyderabad, Kochi, Kozhikode, Mumbai, New Delhi and Trivandrum.