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Kingfisher in crisis; Jet goes for the kill

Last updated on: November 14, 2011 10:00 IST
Kingfisher Airlines chief Vijay Mallya.

Kingfisher's pain could be Jet Airways' gain.

The Naresh Goyal-led carrier plans to increase the number of its full-service flights to attract passengers affected by Kingfisher cancellations.

Currently, about 60 per cent of Jet's domestic flights operate under the Konnect brand, a no-frills service.

The airline now plans to increase the share of full-service fights to 50 per cent, says Jet Airways chief executive officer Nikos Kardassis.

"The situation in the market is changing very rapidly due to Kingfisher cancelling flights every day.

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Kingfisher in crisis; Jet goes for the kill

Last updated on: November 14, 2011 10:00 IST
Jet employees.

"We are looking to add capacity and increase the number of flights, mostly in the full service. The corporate segment is now shifting over to us,'' he says.

The strategy of Jet, which posted a second-quarter loss of Rs 713 crore (Rs 7.13 billion) on the back of high crude oil prices, lean season impact and foreign exchange conversion loss, is simple.

An increase in the number of full-service flights will help improve its yields and also make competition tougher for Kingfisher.

Kingfisher plans to do away with the low-cost brand and offer  full-service products on all flights in the next three months.

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Kingfisher in crisis; Jet goes for the kill

Last updated on: November 14, 2011 10:00 IST
Naresh Goyal.

Air India is the only carrier now to have full-service products on all flights.

Jet Airways and its low-cost subsidiary JetLite operate 620 daily flights across domestic and international networks in the current schedule.

Since last Monday, Kingfisher has been cancelling 30-50 flights daily as it tries to pare losses.

Kingfisher has said it is cutting non-profitable routes and carrying out reconfiguration of planes to relaunch as a full-service carrier.

The reconfiguration will require up to three aircraft to be out of service over the next three months.

That means Kingfisher will be operating a truncated schedule.

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Kingfisher in crisis; Jet goes for the kill

Last updated on: November 14, 2011 10:00 IST
A Kingfisher aircraft.

Although Kardassis did not share the exact number of additional flights, Jet could hope to benefit from the director general of civil aviation's proposal to allow other carriers to operate flights in slots unutilised by Kingfisher.

"In the second quarter, Jet's domestic business was under pressure and ticket prices dropped,'' said Mahantesh Sabarad, an analyst with Fortune Equity Brokers.

According to Sabarad, ticket prices fell 10-12 per cent in the second quarter on a sequential basis and now the airline can hope to recover some of the losses by raising fares.

"For Jet Airways, the more pressing issue is addressing profitability in the domestic sector, which can be done by increasing fares,'' he said.

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Kingfisher in crisis; Jet goes for the kill

Last updated on: November 14, 2011 10:00 IST
A Jet Airways aircraft.

On a stand-alone basis, Jet Airways earned a revenue of Rs 3,332 crore (Rs 33.32 billion) in the second quarter of FY 2012 -- up seven per cent over the same period last year.

Earnings before interest tax depreciation, amortisation and rentals (Ebidtar) stood at Rs 172 crore (Rs 1.72 billion).

However, JetLite's revenue grew just three per cent and it had an Ebidtar loss of Rs 41 crore (Rs 410 million) in the second quarter.

On a consolidated basis, the airline recorded a loss of Rs 713 crore compared to a profit of Rs 12.40 crore (Rs 124 million) in the second quarter of last year.

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