Jet Airways decides to put network expansion over market share
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Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried, will focus on profitable growth and not chase market share.
The airline will strengthen its network and increase frequency on existing routes. It also plans to offer free internet access on all its flights from March, subject to the government’s approval, in a bid to differentiate itself from rivals.
“It’s important that we are more network-focused and not a point-to-point carrier— like some of our competitors,” said Gaurang Shetty, whole-time director, Jet Airways.
Jet Airways will also get into a code-sharing agreement— an arrangement between two or more airlines to book seats on each other’s planes and split revenue—with half a dozen airlines this winter.
Jet has code-sharing agreements for 11 destinations between India and Abu Dhabi. Beyond Abu Dhabi, it connects 18 destinations to Europe, six in the US, four in the Middle-East and four in Africa. In October, it expanded its code-sharing partnership with American carrier Delta Air Lines Inc. and UK-based Virgin Atlantic Airways Ltd, to enhance connectivity for passengers flying to 24 western cities via London Heathrow.
In September, the Mumbai-based airline entered into a code-sharing arrangement with the Air France-KLM and Delta Air Line on US-bound flights from Paris and Amsterdam.
Jet Airways has 19 code-sharing partnerships, and connects 20 international and 46 Indian destinations.
The airline’s network strategy is in contrast with its rivals which are focussed on the domestic market and are adding frequency and starting new routes.
Jet Airways’s strategy has led to an erosion in its domestic market share.
The market share of the full-service carrier dropped to 16.2% at the end of the September quarter from 18.2% at the end of the preceding three months, according to Directorate General of Civil Aviation (DGCA) data.
Shetty is not worried. “Our domestic strategy is built on pure frequency. We are not here to run after market share. It’s just built on being profitable on the routes we deploy,” Shetty said. “Our customers are happy with the value we deliver; I give bottomline results to my shareholders. That is all that matters.”
India’s domestic air traffic grew 23.2% in October, continuing its over two-year run of double-digit growth on the back of cheap fares and rising connectivity. Nearly 8.67 million passengers flew in October, compared with 7.03 million a year ago, DGCA said in a report on 21 November.
“Their (Jet’s) turnaround strategy has been led by the single-minded focus on chasing quality revenue and not market share,” said Mahantesh Sabarad, head—retail research —at SBI Cap Securities.
However, it has indeed lost on the growth momentum that others have been riding on, said Sabarad.
For the quarter ended 30 September, profit rose 23.4% to Rs108.11 crore from the year-ago period. The airline reduced its debt to Rs10,127.61 crore from Rs10,444.36 crore at the end of the year-ago quarter.
Shares of Jet Airways gained 0.71% to Rs396.30 on Tuesday on BSE, while the exchange’s benchmark Sensex advanced 0.17% to 26,394.01 points.