Jet Airways

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NewsJet Airways Launches Konnect, Its Second Budget BrandAnother one- is there any logic in a second low cost brand?

AWIN First May 07 , 2009 Neelam Mathews [email protected]EW DELHI
The overcapacity in the full-fare service segment in India has prompted Jet Airways to launch another budget service today, called Konnect.
Two 737s and six ATRs will be branded as Konnect and fly on shorter sectors such as Chennai-Coimbatore, Chennai-Madurai, Chennai-Kochi, Mumbai-Udaipur and Bengaluru (formerly Bangalore)-Pune.
Jet already owns subsidiary budget Jetlite, an all-economy airline it acquired from Air Sahara.
The hurried announcement comes a day before a ruling is to be made on an ongoing tax case between Jet Airways and Sahara India that claims Jet had defaulted on the installment amount due as payment for acquisition of Air Sahara.
The decision to launch Konnect today had nothing to do with the ruling, says Jet spokeswoman Ragini Chopra, concerning the announcement that was kept under wraps without any marketing before the launch.
“The decision had to be made overnight as we are responding to the global environment conditions. The market is getting price conscious,” says Chopra.
The move is a positive step in that the airlines are recognizing there should be capacity reductions, and the full-service model should not extend beyond the six main metropolitcan cities--Delhi, Mumbai, Kolkata, Bengaluru, Chennai and Hyderabad, said Kapil Kaul, the head of the Indian office of Sydney-based think-tank Center for Asia Pacific Aviation.
With earnings before interest, tax and amortization (EBITA) of budget carriers in India improving, Kaul adds while he is not surprised with the decision to move aircraft to the budget brand. However, he is perplexed as to why Jet chose to create another brand with a business model that has a cost structure higher than its already existing low-cost Jetlite.
Chopra, however, believes it gives flexibility to infuse a different class of service “if tomorrow the market improves and we need to do things differently.”
She added that nearly 40% of Jet’s total fleet, including the two budget brands, will be deployed on the budget routes.
“Jet Airways Konnect will have the flight number range for this service, will be unique, and will help both guests and travel agents identify the class of service,” says a Jet statement.