Jet sees Sahara as value carrier

Jet Airways may convert Air Sahara into a value carrier, a model which is positioned between a full service carrier and a low-cost carrier. However, Jet Airways will not use the brand Air Sahara for the proposed operations.

"We do not believe in low-cost carrier operations as the costs are same to all airlines irrespective of their models. The new name of the subsidiary would be selected at a later stage," a Jet executive said.

While full service carriers (such as Jet Airways, Kingfisher Airlines and Air Sahara) offer food onboard and personal attention, low-cost carriers (such as Air Deccan, SpiceJet and GoAir) do not offer many of these services.

Under the value carrier model, Air Sahara would be operated with all economy class and less frills. The proposed model will be offering basic amenities onboard like light food and water. The configuration of aircraft would be changed to include as many seats to enhance revenues.

Meanwhile, sources said that Jet Airways would be positioned as a premium airline with strong domestic and international operations while its subsidiary will take care of linking more cities. Experts say that it could add more business class seats.

"The basic difference between a full service carrier and low cost carrier is just Rs 300 to Rs 400. This is due to food and sales & distribution cost. But under a value carrier, Jet Airways will benefit from 25 per cent reduction in overall cost owing to increase in the number of seats," a Jet Airways executive said.

Moreover, a value carrier model will act as connecting link to Jet Airways domestic and international flights. In simple terms, Air Sahara would be used as connecting flights to Jet Airways' flights. Currently, Air-India and Indian Airlines are following this model and it will be further strengthened following the merger.

Jet Airways currently operates a fleet of 62 aircraft with over 340 daily flights while Air Sahara is operating 134 flights per day with 27 aircraft. Jet is offering 41,000 seats a day while Air Sahara offers 16,500 seats per day.

"With Air Sahara's wide network, it would be a better feeder airline for Jet Airways and will enjoy the advantages of latter's subsidiary status," he added.

Pointing out the network constraints faced by SpiceJet, industry sources said that the value carrier was a better option for Jet Airways as it can enjoy the vast network of Air Sahara. Air Deccan, a low-cost carrier, has the largest network today covering 64 airports, operating over 350 flights.

But some analysts say that it could be a difficult task as such a strategy might lead the value carrier to cannibalise into Jet Airways economy passengers.

"If you look at Jet, their economy discounted fares are sometimes at par with that of budget carriers. So cannibalisation would happen and that won't help them until they convert Jet into a premium product only for business and first class passengers."