Air Sahara to reincarnate as JetLite

To Offer Cheaper Fares, New Network Being Planned, Aircraft Leases To Be Renegotiated To Cut Costs

JET Airways will operate Air Sahara as a separate airline under a new brand, Jet Lite. The airline will be positioned as a value carrier, which is ``not fully low-cost but positioning fares lower than full service airlines’’, Jet Airways chairman Naresh Goyal said. In his first major media interaction in over a year, Mr Goyal and his A team, chalked out the broad contours of the way forward for the two airlines, after the longdrawn acquisition of Air Sahara. Jet Lite, will be a 100% subsidiary of Jet Airways though the operations of the two companies will be completely separate. Unlike other classical low-cost airlines operating in India, Jet Lite will have basic food and beverage service onboard. It is still not clear how the Jet will balance the network of the two airlines to ensure that its existing network is not cannibalised by the new airline. Mr Goyal said the new network was being worked out by route planners and that the two carriers will fly to common destinations. Despite preparing to launch a ``less than full service’’ carrier, Mr Goyal emphasised that he did not think there is such a thing as a low-cost airline in India. They are actually low-fare, he said. Unlike airlines like Ryanair and EasyJet or Southwest, the Indian LCCs do not have the advantage of cheaper secondary airports. To cut costs on Jet Lite, the airline will now review all the aircraft leases signed by Sahara and will try to renegotiate some of them. Expensive leases like those of the CRJ jets may be terminated, even if there are penalty clauses Mr Goyal said. Other synergies are expected from cutting engineering costs and increasing productivity because of the larger and more efficient Jet Airways operations, he said. The Jet Lite fleet will ultimately be a combination of owned and leased aircraft. Commenting on Jet Airways’ own expansion plans, director on the Jet board Vic Dungca said the airline will induct 20 long-haul aircraft, a mix of Boeing 777s and Airbus A330s in the next 18 months. The airline has planned to open a second hub in Brussels for its US flights and will also launch operations to China and the middle east. These flights will however, take a few years to turn profitable and analysts say the Jet management will have to be ready for a huge cash burn in the interim. On the domestic front, the airline plans to add capacity at the rate of about 15% per annum, even though the market is growing much faster at roughly 40%, Mr Goyal said. Jet plans to raise about $400m by diluting equity later this year. The airline will also gradually upgrade its domestic product with new seating and inflight entertainment over the next three years. Mr Goyal said he did not believe that marketshare was an efficient barometer to measure the health of an airline. Jet Airways has 20 to 30% higher yields than rival airlines, he said.

Courtesy: EconomicTimes