 "Konnect phaseout to boost JetLite, Etihad services")
The move will help strengthen subsidiary JetLite’s performance and help Etihad Airways, its new partner, which relies on code shares partnerships to boost its traffic and revenue.
Jet Airways chairman Naresh Goyal announced the single-brand strategy on Monday, the move coming within a few months of Etihad completing the acquisition of 24 per cent stake in the Indian carrier.
Etihad has extensive code share partnerships with 47 airlines around the world. Initially, both Jet and Etihad were allowed to code share on international routes from India. Approval was granted for code shares on 31 domestic routes two months earlier.
Code shares are commercial agreements will allow airlines to sell on each others’ networks. The government approval means Etihad can sell seats on Jet’s domestic network and cover various destinations. These include Amritsar, Ahmedabad, Goa, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mangalore, Patna, Thiruvananthapuram and Vadodara.
“Organic growth was supported by code share and equity alliance partnerships in the first half of 2014, delivering an estimated 1.4 million passengers on to Etihad Airways flights (up 28 per cent year-on-year) and contributing revenue of $471 million, which represented 23 per cent of the airline’s passenger revenue,’’ Etihad Airways said its half-yearly presentation.
Goyal conceded the dual brand strategy was confusing passengers and the airline hoped to address passenger needs by offering value and competitive fares, and ensuring service continuity to incoming international passengers on Jet’s domestic network. The Konnect model is offered only in the domestic network, on both Jet Airways and JetLite planes. Currently, the Konnect service makes up 60 per cent of Jet’s domestic capacity.
A single brand and service offering would mean travellers earn frequent flyer miles uniformly across the domestic network and encourage more passengers to take Jet’s domestic flights. Currently, passengers taking JetLite flights earn lesser miles than Jet Airways’ full service flights, sources said. The transition will, thus, help both Jet Airways and Etihad to increase their revenue.
Etihad did not respond to an email query on the topic.
The move to end the Konnect service is also expected to strengthen JetLite. Jet acquired Air Sahara and renamed it JetLite in 2007. Jet Airways has Rs 3,400 crore in the airline in equity and as interest-free loan but the subsidiary continues to incur loss and has a negative net worth. Jet Airways made a Rs 700 crore impairment provision in the fourth quarter of 2013-14 for this reason.
Amongst other things the airline has also been toying with the plan to move all its 18 ATR turboprop planes to JetLite but the plan has been put on hold. JetLite has 11 Boeing 737s which includes 9 planes with twin class offering and two all economy class planes.