Jet Airways will focus on international expansion, as domestic yields come under strain due to high fuel costs and discount pricing by other carriers. International routes contribute to 57 percent of its revenue. The airline posted a Rs 123 crore loss on a standalone basis in the first quarter.
Jet’s vice-president (investor relations), K G Vishwanath, told analysts in a conference call that the airline would optimise its international network and focus on connecting the Gulf with Southeast Asian cities. This year, Jet will be adding four to six narrow-body Boeing 737s. According to sources, Jet plans to launch a third flight on the Mumbai-Bangkok sector. IndiGo’s foray in global routes is leading to intense competition on the Dubai and Bangkok routes, and Thai Airways has lowered fares as well.
Jet is also adding a flight on the Thiruvanathapuram-Sharjah route and introducing a flight to Manila. It will also be using a Boeing 777 on its Hong Kong and Newark routes from September. It would have first-class seating and the product upgrade will enable the airline to compete with Kingfisher Airlines, which claims an over 40 per cent market share on the Hong Kong route.
“We expect the international routes to contribute even higher revenues. The airlines wants to reach to more international destinations and that is the reason it also ordered Boeing 787 planes,” said Mahantesh Sabarad, analyst with Fortune Equity Brokers (India) Ltd.
Jet flies to 24 international routes. On most sectors, except Johannesburg and Milan, it has managed to fill seats in excess of 75 per cent. In the domestic market, “irrational pricing” has hurt profitability. However, pricing in the global market was stable and the airline was able to improve its yields with higher load factors.
“In the international business, we enter our strongest months and the forward bookings suggest demand and yield growth is strong. We expect to maximise seat factors in Q2 (July-September) on account of ever improving network presence and excellent service levels,” the airline said in its Q2 outlook.
