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This article was first published 12 years ago

How AI, Kingfisher crisis benefited Jet

Last updated on: May 24, 2012 16:14 IST

Photographs: Punit Paranjpe/Reuters

The crisis in Air India and Kingfisher Airlines has benefited Jet Airways the most and the private carrier is expected to place an order of up to 100 narrow-body aircraft during this financial year, a global aviation strategy firm has projected.

The Centre for Asia-Pacific Aviation also expects India's airlines to post a combined loss of a whopping $1.4 billion, with Air India likely to be the 'worst performer' to report a loss of almost the entire amount of $1.3 billion.

In its latest analysis titled 'India Outlook 2012-13', it said that while Kingfisher would post an estimated loss of $220-260 million, the remaining four private carriers -- Jet Airways, IndiGo, SpiceJet and GoAir combined, could post a modest profit of approximately $200 million.

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How AI, Kingfisher crisis benefited Jet

Image: Kingfisher chairman Vijay Mallya speaks with the media after his meeting with Director General of Civil Aviation E K Bharat Bhushan.
Photographs: Parivartan Sharma/Reuters

It said although the troubles facing Air India and Kingfisher 'have been positive for all of the other carriers, Jet Airways has been, and will continue to be, the largest beneficiary.'

The 'dramatic contraction' of Kingfisher from 66 to 16 operational aircraft, half of which are regional turboprop ATRs, and the pilots' strike hitting Air India's long-haul global operations, has left the domestic and international business market open for Jet Airways.

The CAPA report also said that Jet Airways was expected to 'place a massive fleet order for up to 100 narrow-body aircraft in 2012/13'.

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How AI, Kingfisher crisis benefited Jet

Photographs: Punit Paranjpe/Reuters

"Despite the carrier's own weakness, it may decide to take advantage of the situation to expand both domestically and internationally as it had done in 1996 when a number of its competitors had closed down," it projected.

The CAPA said it expected Jet to place the large fleet expansion order to meet both replacement and growth requirements, with the Naresh Goyal-promoted carrier actively evaluating the Airbus A-320neo plane.

Jet was also likely to lease up to 10 wide-body A-330s to support the expansion of its European route network.     
Referring to its profit-outlook for Indian carriers barring Kingfisher and Air India, the analysis said their yield improvements would, however, be 'negated by the extremely challenging cost environment and supply side constraints.'

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How AI, Kingfisher crisis benefited Jet

Photographs: Reuters

It also estimated domestic capacity growth of 7-8 per cent in 2012-13 with the domestic traffic growth hovering around 15 per cent, instead of 17 projected earlier.

This was largely due to the lower capacity growth accounted for by Kingfisher downsizing its fleet.

CAPA said the Indian carriers are expected to add approximately 24 aircraft during the year, which includes eight Q400s to be inducted by SpiceJet.

This corresponds to the equivalent of 20 narrow-body planes on domestic routes.

"Much will depend upon the impact of oil prices and other input costs on airfares.

Upside growth is limited by the fact that capacity expansion will be measured, and with load factors already quite strong, there is limited opportunity to grow traffic through higher occupancies," the study said.

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