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Why Konnect edged out JetLite

Last updated on: April 2, 2012 11:02 IST

Why Konnect edged out JetLite

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Aneesh Phadnis in Mumbai

It was a quiet image makeover -- without any frills -- but Jet Airways hopes that a change in the branding strategy of its low-cost product will also help change its fortune.

Last Sunday, Jet Airways phased out JetLite, the low-cost service it launched after acquiring Air Sahara, in 2007.

Instead of three brands, it will now have only a full-service Jet Airways and a low-cost Konnect brand.

The airline is using JetLite Boeing 737s for the Konnect service keeping the former's routes and level of service intact.

JetLite has been rechristened as JetKonnect and airline officials hope the branding will help improve yields and attract a pie of the premium traffic, too. 

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Why Konnect edged out JetLite

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Jet Airways will be reconfiguring 19 single-class Boeing 737s from the JetLite fleet to add eight business class seats.

Currently, all JetLite planes have only economy class seating.

This will make available an additional 152 business class seats across the network.

That will be an extra 10 per cent business class seats in Jet's domestic network.

Jet Airways chief commercial officer Sudheer Raghavan confirmed the move.

"Erstwhile JetLite Boeing 737 aircraft will also have eight-seat configuration in the Premiere Cabin upfront.

"These aircraft would however, be reconfigured in a phased manner, over a period of 12 months," he stated.

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Image: People look at the newly introduced premier class cabin in a Jet Airways Boeing 777-300 ER.
Photographs: Punit Paranjpe/Reuters

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Why Konnect edged out JetLite

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Post-merger, Jet Konnect will account for 80 per cent of all Jet domestic flights, though the figure would vary season to season.

Currently, 17 twin class Boeing 737s and 20 ATRs planes of Jet Airways and 19 Boeing 737s from JetLite fleet are used for Konnect flights.

For Jet, the branding exercise has come at an opportune time. Kingfisher Airlines, which till recently was a contender for the number two slot, has shrunk drastically and lost much of its corporate business to rivals.

"As the capacity in the market is less, all airlines are selling tickets in the higher fare slabs," a source said.

The airline has been toying with the idea of introducing the no-frills Konnect service on some of its Gulf routes as there is not much demand for premium class seats, but no decision has been taken as yet.

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Why Konnect edged out JetLite

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"JetKonnect will currently operate only one international route namely the existing service between Delhi and Kathmandu.

"However, as part of its management process, the company will carry out continuous evaluations to ascertain demand for such services.

"Based on demand, JetKonnect flights would be deployed further on international routes to cope with the growth in those specific markets," Raghavan said.

The move to merge the two low cost brands had financial underpinnings too.

Over the last three quarters, Jet Airways posted losses as operating costs increased on the back of fuel price rise.

JetLite met the same fate with losses in all the quarters.

Airline officials admitted to investor analysts last year that JetLite was less immune to discount pricing unleashed by the competition.

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Image: A JetKonnect aircraft.
Photographs: Courtesy, Jetphotos.net

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Why Konnect edged out JetLite

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"With Air India dropping prices, we started losing customer even at JetLite levels, because those passengers actually found Air India much cheaper than flying on JetLite.

"That's the reason why we had to drop our fares significantly to be still relevant compared to Air India in the market," K G Vishwanath, Jet's vice president (investor relations) had told analysts last May.

In the third quarter of FY 2012 Jet Airways lost Rs 101 crore (Rs 1.01 billion) while Jet Lite had a loss of Rs 21 crore (Rs 210 million).

The breakeven seat factor and average revenue per passenger showed a negative trend for JetLite in all the three quarters.

The breakeven seat factor was 99.3 per cent in the second quarter.

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Why Konnect edged out JetLite

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Raghavan, however, denied that JetLite brand had limitations such as high breakeven factor or slower revenue growth.

"High seat factors have been registered consistently for JetLite. However, we are now streamlining our low fare product offerings to simplify brand recall serving the same market," he said.

"Given that our low-fare, high-quality all-economy product, Jet Konnect, has proved to be a successful model since its introduction in May 2009, we thought it best to consolidate our products in the low-fare segment with a single brand -- JetKonnect -- for enhanced brand recall," he said.

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Why Konnect edged out JetLite

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"It does not make sense to have two brands in the same segment because there is little product differentiation," said an aviation expert.

"It made sense to merge. From a marketing perspective too there is clarity. There is no confusion amongst passengers about these brands" he added.

On an operating level, the merger will not mean an end to JetLite as an entity.

"There will be no impact on staff and JetLite and Jet Airways will continue to exist as two separate yet distinct legal entities, operating under their respective operating permits -- selling the JetKonnect brand.

"The balance sheets and accounts of the two companies though will remain separate," Raghavan said.


Image: Jet chief Naresh Goyal.
Photographs: Punit Paranjpe/Reuters

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