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Jet looks West to take on international rivals

Jet looks West to take on international rivals
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First Published: Thu, Jun 09 2011. 01 15 AM IST

Protecting interests: Naresh Goyal says he is not in favour of allowing foreign airlines to invest in Indian carriers.
Protecting interests: Naresh Goyal says he is not in favour of allowing foreign airlines to invest in Indian carriers.
Updated: Thu, Jun 09 2011. 10 16 AM IST
Singapore/ New Delhi:Jet Airways (India) Ltd, the country’s largest airline by passengers carried, plans to increase its focus on international passengers and order long- and medium-haul aircraft to help it take on overseas rivals.
Foreign airlines, led by West Asia’s Emirates, Qatar Airways, Air Arabia, Fly Dubai and Etihad Airways, carry 65% of the international traffic to and from India. Jet, Air India, Kingfisher Airlines and SpiceJet have the rest.
Protecting interests: Naresh Goyal says he is not in favour of allowing foreign airlines to invest in Indian carriers.
Jet chairman Naresh Goyal said competition from the West Asian carriers was understandable. With the “opening of the economy, we can’t put the clock back”.
But he added he hopes to eat into their share.
“We are preparing ourselves on how to take on competition and position ourselves as an Indian carrier with our brand reputation, name, reliability and use our hubs between (New) Delhi and Mumbai, and then bring the traffic from Europe (to South Asia and South- East Asia),” Goyal said on the sidelines of the International Air Transport Association (Iata) airline meet in Singapore.
“No Indian carrier has ever carried traffic beyond India. We have already started it. In London, we have replaced many carriers (in flying passengers) to Bangkok,” he said.
Jet’s fleet of 116 aircraft will be expanded over the next three years, with a focus on Europe.
“Brussels still continues to be our hub. We have added Milan,” Goyal said.
“We are looking at some points in Europe such as Paris, Rome, Amsterdam, some places in Germany, (and) continental Europe, because we are seeing where the Gulf carriers are carrying the traffic from,” he said. “Then in China, we are looking again to introduce Shanghai, we are studying Beijing so that India can participate (in this traffic). It’s not only for Indian traffic to use our hubs (Delhi and Mumbai airports).”
Jet started flights to San Francisco from Mumbai via Shanghai in 2008 but these were soon discontinued due to commercial reasons.
Mint reported on 22 October about Jet’s plan to diversify its international operations from focusing on foreign passengers rather than just Indian passengers flying abroad. In August last year, it made a detailed presentation to the aviation ministry and asked the government to be “prudent” in granting rights to international carriers.
Goyal said he is not in favour of allowing foreign airlines to invest in Indian carriers. “Our country is (already) more liberal than most countries,” he said.
Jet plans to grow at 11-12% a year in the domestic market and internationally at 12-15%. It will order Boeing 737s and medium-haul Airbus A330 aircraft.
“We are already ordering aircraft. we are in the process of finalizing certain leases. We are ordering more Boeing 737s and we are ordering Airbus A330s. These will be delivered in the next two-to-three years,” Goyal said but did not divulge the number of aircraft ordered.
An Airbus A330 has a sticker price of just over $200 million.
Goyal said Jet was in talks with international airline alliances such as Star Alliance and SkyTeam but is yet to decide on which one to join. Members of such alliances cooperate in ticket sales and operations.
Jet has not made profits since 2006-07.
Jet narrowed its loss from Rs420.18 crore to Rs85.84 crore in fiscal 2011. It has a debt of $3 billion.
Goyal said given the government’s policies on ownership, “a QIP (qualified institutional placement of shares) or other things for raising funds will make sense, and there are certain dilutions which we will do when the right time comes.”
An analyst said the airline’s debt remains a concern.
“Large repayments seem a remote possibility at this stage, in our opinion, as fund-raising options like QIP may not be possible post the FIPB’s (Foreign Investment Promotion Board) directives on promoter dilution; and given current prices, we argue Jet would be unwilling to come to the market for a rights issue,” Mark Webb, analyst, The Hongkong and Shanghai Banking Corporation Ltd, said in an 8 June note.
tarun.s@livemint.com
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First Published: Thu, Jun 09 2011. 01 15 AM IST