Jet to scrap low-cost service by year-end

Konnect to be phased out as airline struggles to contain losses

Jet Airways has decided to scrap its low-cost brand, Jet Konnect, launched five years ago, to focus on its full-service operation, as it faces competition from established airlines and start-ups like AirAsia and Vistara.

The airline, which reported its sixth straight quarter of losses on Monday (though it managed to reduce the figure), will reconfigure all its Boeing planes and offer a standard configuration of 12 business class and 156 economy seats. Jet Airways hopes to switch to the single model by the end of the year.

Jet Konnect was started to compete with low-cost airlines but the airline has been unable to improve its loads and the twin brand strategy has led to confusion among passengers.

Announcing the decision to operate a single brand, Jet Airways Chairman Naresh Goyal said: "We as an airline confused customers (with multiple brands)... The main aim in the tie-up (with Etihad) will be to increase market share."

Jet Airways operates a full service and no-frills brand with its two operating permits. Under Jet Airways permit, it offers full service and Konnect service. Under JetLite permit, it only offers Konnect service. Under the Jet Airways permit, it operates about 270 domestic flights and nearly 60 per cent of these offer no-frills service. Subsidiary JetLite has 12 aircraft.

Goyal, however, clarified there was no plan to sell JetLite. The airline said the switch to a single full-service brand would result in consistent high-quality service and deliver operational flexibility.

"We will offer value for money to customers. We will not be inferior to anyone," Goyal informed. He added the extra cost involved pertained to provision of free meal on board and deployment of one additional crew member. Jet's low-cost carrier, JetLite will now bear the main airline's branding, Goyal said, without elaborating on whether the changes would result in job losses or alterations to the size of the fleet.

Under Jet Airways, the airline operates about 270 domestic flights and nearly 60 per cent of these offer no-frills service.

The company's aircraft would now be split between economy and business-class seats but the airline's pricing would remain competitive, despite the scrapping of the low-cost carrier, said James Hogan, chief executive of Etihad Airways, which owns a 24 per cent stake in Jet.

Jet Airways had launched Jet Konnect in May 2009 as a no-frills brand to compete with low-cost airlines. In 2011, Jet Airways announced its decision to merge JetLite (formed in 2007 after takeover of Air Sahara) with JetKonnect - then the third brand in the airline's fold. JetLite started operating under the JetKonnect brand in 2012, as the airline wanted to maintain only one brand in the low-fare category.

But the airline has been unable to improve its loads and the twin brand strategy led to confusion among passengers.

IndiGo also managed to drive away business with its focus on on-time performance, cleanliness and frequencies.

Experts say Jet Konnect had been competing directly with low-cost carriers, even though its costs were much higher. "The airline has finally acknowledged they cannot continue to sell tickets at our levels and continue to make losses. This will hopefully bring in more sanity in air fares," says a senior executive of a low-cost airline.

The airline was forced to sell tickets at a discount in the face of intense competition in a quarter (April-June) that is typically a strong one for the industry.

Jet Airways reported a standalone net loss of Rs 217.65 crore for the quarter ended June, down 39 per cent from the year-ago period. Revenue rose 17 per cent to Rs 4,685.64 crore in the reporting period, while total passenger revenue rose 11.1 per cent to Rs 4,262.6 crore.