jet_air
13th Oct 2008, 19:12
Guys the unthinkable has just happened !
Kingfisher and Jet Airways have just announced an Alliance:eek: !
The details from Times of India 13th Oct 2008.
NEW DELHI/MUMBAI/BANGALORE: The fight for survival has brought two of India's biggest business rivals — Jet Airways owner Naresh Goyal and Kingfisher Chief Vijay Malaya together.
After several rounds of "summit" talks between the two aviation czars, they announced on Monday night that they are forming an operational alliance that will command nearly 50% market share of the domestic skies — and could spell bad news for the low-fare model.
Each Jet and Kingfisher are losing up to Rs 10 crore daily. Now this deal, which may ultimately lead to a consolidation once one of the players has access to funds to buy out the other, could allow them to cut some losses by having features like code-share agreements, especially on foreign routes because Kingfisher will now go slow on expanding its international operations.
The two airlines may also not compete on domestic sectors by having flights on a sector at close to each other's timings; have better coordination in reducing capacity and hiking fares and possibly do common ground handling at airports to cut costs.
Mallya went to meet Goyal at Jet's head office at Mumbai's Andheri and then on Monday evening Goyal went to Kingfisher House at Vile Parle. Even the buzz about these talks helped pull the airline scrips up. On a day the Sensex closed 7.4% higher, the Kingfisher stock closed a whopping 32.35% higher at Rs 51.35. Jet, which touched its 52-week low of Rs 255 during intra-day on Monday, finally closed 11.12% higher at Rs 291.80. Currently, the scrips are trading at less than half their 52-week highs.
Market buzz credited aviation minister Praful Patel with bringing the two together to form brand GM (Goyal-Mallya) of Indian aviation. However, Patel laughed this off. "I didn't get into this. I just cautioned the entire industry and did not ask any one in particular to shake hands. This (Jet-Kingfisher alliance) is born out of necessity and adversity. Airlines have to first be able to survive for a later-day fight (for market leadership)," Patel told TOI.
The two tied up for what Patel called the "writing on wall" — huge losses and no early sign of recovery from the current turmoil. And just when high oil prices — that triggered their troubles — started to cool off, the global meltdown has led to twin troubles for cash-strapped airlines: further drop in traffic and banks not willing to lend money to the "risky" aviation business.
Attempts like cutting flights and laying off staffers haven't helped pull the airlines out of the woods so far. Now they are again willing to take unthinkable steps like Jet and Kingfisher's coming together.
Said an airline owner, "Talks between Goyal and Mallya started basically to evolve a consensus on two things — route rationalization (read cutting flights) and hiking fares in the hope that others will also be forced to do so. The subtext of the merger was always there. Both the airlines are financially stretched, and it's a matter of time before they face heat from creditors (if they aren't already). Airlines want to survive somehow till the next government is in place and then try for a change of policy to allow foreign airlines to buy stake in domestic carriers."
Kingfisher — which lost Rs 1,000 crore last fiscal — has been forced to drastically cut down on Mallya's ambitious international plans. The airline, which launched a Bangalore-London flight recently, had ordered 10 A-340s for being flown on nonstop-US route. But now it has sold three A-340s to a Nigerian carrier and converted order of five to the medium range A-330. Airbus was to deliver Kingfisher's first A-340 during the Hyderabad air show but the European major's statement of activities during the expo had no mention of bringing this plane.
In addition, Airports Authority of India (AAI) is also breathing down Kingkisher's neck for payment of dues. "At dues of over Rs 200 crore, Kingfisher is among the biggest private airline defaulters," said a senior AAI official. On October 7, oil PSUs also wrote to all airlines asking them to clear fuel bill dues or face stoppage of supply or switch over to cash and carry.
What does this mean for passengers?
The era of low cost flying could well and truly be over after this operational alliance. Both Mallya and Goyal have in the past scoffed at the concept of low cost carrier (LCC) in India as all carriers have to pay same charges. Calling LCCs low fare airlines, Jet and Kingfisher have raised fares of the LCCs they took over — Sahara (now JetLite) and Air Deccan (now Kingfisher Red).
"Together they will command half of domestic market shares. Any move by them to further raise fares will force other independent LCCs to either follow or become unviable and perish," said an airline official. Thanks to a sharp hike in operating cost in past few months, Deccan today carries about 3 lakh passengers a month as compared to seven lakh a year ago and loses twice the money now.
:ugh::ugh::ugh::ugh::ugh::ugh:
Kingfisher, Jet Airways announce alliance-India Business-Business-The Times of India (http://timesofindia.indiatimes.com/Kingfisher-Jet_Airways_announce_alliance/articleshow/3591641.cms)
Kingfisher and Jet Airways have just announced an Alliance:eek: !
The details from Times of India 13th Oct 2008.
NEW DELHI/MUMBAI/BANGALORE: The fight for survival has brought two of India's biggest business rivals — Jet Airways owner Naresh Goyal and Kingfisher Chief Vijay Malaya together.
After several rounds of "summit" talks between the two aviation czars, they announced on Monday night that they are forming an operational alliance that will command nearly 50% market share of the domestic skies — and could spell bad news for the low-fare model.
Each Jet and Kingfisher are losing up to Rs 10 crore daily. Now this deal, which may ultimately lead to a consolidation once one of the players has access to funds to buy out the other, could allow them to cut some losses by having features like code-share agreements, especially on foreign routes because Kingfisher will now go slow on expanding its international operations.
The two airlines may also not compete on domestic sectors by having flights on a sector at close to each other's timings; have better coordination in reducing capacity and hiking fares and possibly do common ground handling at airports to cut costs.
Mallya went to meet Goyal at Jet's head office at Mumbai's Andheri and then on Monday evening Goyal went to Kingfisher House at Vile Parle. Even the buzz about these talks helped pull the airline scrips up. On a day the Sensex closed 7.4% higher, the Kingfisher stock closed a whopping 32.35% higher at Rs 51.35. Jet, which touched its 52-week low of Rs 255 during intra-day on Monday, finally closed 11.12% higher at Rs 291.80. Currently, the scrips are trading at less than half their 52-week highs.
Market buzz credited aviation minister Praful Patel with bringing the two together to form brand GM (Goyal-Mallya) of Indian aviation. However, Patel laughed this off. "I didn't get into this. I just cautioned the entire industry and did not ask any one in particular to shake hands. This (Jet-Kingfisher alliance) is born out of necessity and adversity. Airlines have to first be able to survive for a later-day fight (for market leadership)," Patel told TOI.
The two tied up for what Patel called the "writing on wall" — huge losses and no early sign of recovery from the current turmoil. And just when high oil prices — that triggered their troubles — started to cool off, the global meltdown has led to twin troubles for cash-strapped airlines: further drop in traffic and banks not willing to lend money to the "risky" aviation business.
Attempts like cutting flights and laying off staffers haven't helped pull the airlines out of the woods so far. Now they are again willing to take unthinkable steps like Jet and Kingfisher's coming together.
Said an airline owner, "Talks between Goyal and Mallya started basically to evolve a consensus on two things — route rationalization (read cutting flights) and hiking fares in the hope that others will also be forced to do so. The subtext of the merger was always there. Both the airlines are financially stretched, and it's a matter of time before they face heat from creditors (if they aren't already). Airlines want to survive somehow till the next government is in place and then try for a change of policy to allow foreign airlines to buy stake in domestic carriers."
Kingfisher — which lost Rs 1,000 crore last fiscal — has been forced to drastically cut down on Mallya's ambitious international plans. The airline, which launched a Bangalore-London flight recently, had ordered 10 A-340s for being flown on nonstop-US route. But now it has sold three A-340s to a Nigerian carrier and converted order of five to the medium range A-330. Airbus was to deliver Kingfisher's first A-340 during the Hyderabad air show but the European major's statement of activities during the expo had no mention of bringing this plane.
In addition, Airports Authority of India (AAI) is also breathing down Kingkisher's neck for payment of dues. "At dues of over Rs 200 crore, Kingfisher is among the biggest private airline defaulters," said a senior AAI official. On October 7, oil PSUs also wrote to all airlines asking them to clear fuel bill dues or face stoppage of supply or switch over to cash and carry.
What does this mean for passengers?
The era of low cost flying could well and truly be over after this operational alliance. Both Mallya and Goyal have in the past scoffed at the concept of low cost carrier (LCC) in India as all carriers have to pay same charges. Calling LCCs low fare airlines, Jet and Kingfisher have raised fares of the LCCs they took over — Sahara (now JetLite) and Air Deccan (now Kingfisher Red).
"Together they will command half of domestic market shares. Any move by them to further raise fares will force other independent LCCs to either follow or become unviable and perish," said an airline official. Thanks to a sharp hike in operating cost in past few months, Deccan today carries about 3 lakh passengers a month as compared to seven lakh a year ago and loses twice the money now.
:ugh::ugh::ugh::ugh::ugh::ugh:
Kingfisher, Jet Airways announce alliance-India Business-Business-The Times of India (http://timesofindia.indiatimes.com/Kingfisher-Jet_Airways_announce_alliance/articleshow/3591641.cms)