Jet Airways reaps profit on West Asian routes

Jet Airways reaps profit on West Asian routes
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First Published: Thu, Aug 21 2008. 11 25 PM IST

Spreading wings: Jet Airways started flying to Muscat and Abu Dhabi this year after the government opened the route to private carriers. Photograph: Hemant Mishra / Mint
Spreading wings: Jet Airways started flying to Muscat and Abu Dhabi this year after the government opened the route to private carriers. Photograph: Hemant Mishra / Mint
Updated: Thu, Aug 21 2008. 11 25 PM IST
Mumbai: Despite the downturn in global aviation, Jet Airways (India) Ltd, the country’s largest private airline by passengers, has started earning profits within a short period on some of its flights to West Asia.
Spreading wings: Jet Airways started flying to Muscat and Abu Dhabi this year after the government opened the route to private carriers. Photograph: Hemant Mishra / Mint
High ticket prices and 60% seat occupancy, especially in the business class, has helped the airline post profits on its daily flights from various Indian cities to Muscat and Abu Dhabi, said a person familiar with the company’s operations on this route.
Jet Airways started flying to Muscat in January and to Abu Dhabi in April, after the civil aviation ministry threw open the route to Indian carriers other than state-run National Aviation Co. of India, or Nacil, that runs Air India, at the start of this year.
Traditionally, short international flights, such as to West Asia or Singapore, take at least 12 months to generate profits while long flights to the UK or the US take about 18 months.
“Certain West Asian routes have started making money,” chief executive Wolfgang Prock-Schuaer said, but declined to provide details citing company policy. “We never compromised on fares compared with other carriers in West Asia. Instead, we always were on the upper band of pricing since we offer quality product on these routes.”
Jet Airways, which started international operations in 2004, also flies to Kuwait, Bahrain and Doha in West Asia, and plans to start daily flights from Mumbai and Delhi to Dubai from 23 August. On these other existing routes, Jet Airways claims market leadership and that it attracts maximum local traffic.
Its rival Nacil, along with its low-fare carrier Air India Express, earns 25% of its total international revenue from West Asian operations on 30% seat occupancy, according to a senior company executive, who declined being named.
Apart from Indian carriers, Emirates Airline, Qatar Airways, Gulf Air, Jazeera Airways and Air Arabia operate flights between India and West Asia.
According to a Mumbai-based analyst with a domestic brokerage, Jet Airways has been able to cut operational costs on these routes by using medium-sized planes from its domestic network.
“The planes used for domestic operations, which would have been kept idle at night, were redeployed on the West Asian routes. This has helped the carrier to cut down its cost of operations,” he said on condition of anonymity.
“The West Asian routes were always profitable,” said Ajay Prakash, national general secretary of trade body Travel Agents Federation of India. “It is possible for Jet Airways to make money in this route ahead of schedule, though it is fighting with Nacil and other established carriers flying to West Asia.”
Domestic carriers are expecting combined losses of $2 billion (Rs8,720 crore) in the fiscal year that ends on 31 March, because of high jet fuel prices. The aviation market to West Asia is India’s most profitable route, with 10-11 million passengers flying to these countries every year. In other words, one-third of Indian international travellers fly to West Asian destinations. Much of this traffic is generated by labour, business and leisure travellers.
In an earlier conversation, Naveen Chawla, regional manager (India) of Qatar Airways, one of the leading carriers operating flights to West Asia from India, said, “The pie of India-West Asia is growing every year. Therefore, there is nothing to worry.”
However, other international routes including flights to South-East Asia, Europe and the US are facing margin pressures because of high fuel cost.
Jet Airways earned 48% of its total revenues in the first quarter of 2008-09 from its international operations, and expects this to rise to 50% in the second quarter. Overall, the airline’s international operations made a pre-tax loss of Rs283.1 crore in the first quarter, compared with a loss of Rs81.7 crore in the corresponding period last year.
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First Published: Thu, Aug 21 2008. 11 25 PM IST