Home / Companies / News /  Jet Airways may shift away from low-cost model

New Delhi: Jet Airways (India) Ltd, which remodelled subsidary JetKonnect as a budget airline, may reposition it again as a full-service airline as part of its alignment with Etihad Airways PJSC.

The remodelling, offering free meals, better frequent flier miles and business class seats, may mean that Naresh Goyal-promoted Jet Airways could switch from its 2008 shift of mirroring a low-fare airline like IndiGo to becoming a full-service network carrier. IndiGo charges for meals, has no business class seats and does not reward passengers for loyalty with frequent flier programmes.

“The plan is to start giving free meals to passengers like it was earlier on JetKonnect and bring the airline at par with Jet Airways in all respects," said a person familiar with the matter who declined to be named, “This will be one of the many steps towards aligning with Etihad."

JetKonnect may also offer better reward points to customers like parent Jet Airways in its frequent fliers programme. All JetKonnect flights are expected to have eight business class seats, while the rest will be economy, this person said.

The airline was discussing the plan to offer free food internally and may execute it soon, said a second person, who too declined to be named.

An email sent on Friday to Jet Airways spokeswoman remain unanswered.

Abu Dhabi-based Etihad is a full-service airline, which means it provides free meals, lounge access, in-flight entertainment, frequent flier rewards within the airfare it charges for business or economy seats.

Jet Airways provides similar features on its international service and most domestic services, but under strain from rivals, it had decided to turn its subsidiary Jet Konnect into a dedicated low-cost airline in 2008 with all-economy seats and food sold on board. Jet Konnect is the rebranded version of Air Sahara the airline firm Jet bought in 2007.

Jet is now in the process of selling a 24% stake to Etihad and is waiting for a final clearance from the cabinet committee on economic affairs after getting a conditional nod from the Foreign Investment Promotion Board (FIPB) in July.

After this, it plans to connect 23 cities to Abu Dhabi from where they can fly further to Europe, North America or other continents, mostly on Etihad. This means, for instance, that a Lucknow-Abu Dhabi-New York trip has to have the same service standards throughout—Lucknow-Abu Dhabi cannot be low cost and Abu Dhabi-New York full service.

The move to launch JetKonnect led to brand confusion, with passengers unclear about whether they would get a Jet Airways service or a JetKonnect one, analysts said.

“The Jet Airways story is very confused. There’s Jet Airways and Jet Konnect and there was JetLite," said Shakti Lumba, an aviation consultant formerly working with Air India and IndiGo. “Until it reorganises, I see little benefit from the oxygen Etihad is supplying."

The JetLite brand was converted into JetKonnect in 2012. Together they now operate over 580 flights daily with 111 aircraft to 76 cities.

A foreign airline executive said it was never a good idea for Jet to have diluted its product. “It is never a good strategy to turn an existing full-service airline into an LCC overnight. Just changing colours on the aircraft, and a nice new logo and stopping food service is taking a very shallow, very naive approach to the whole LCC (low cost carrier) thing. It confuses and demoralizes the company staff. It is like white washing a building without fixing the cracks in it. Over time, the paint starts to wear off and you can see the cracks reappear," this executive said, asking not to be identified.

Jet Airways hasn’t been profitable in recent years. In the June quarter, Jet Airways posted a loss of 355 crore.

A person with knowledge of the airline said serving free meals will mean at least 100-200 as an extra cost per passenger, which in turn means 50-60 crore in additional cost a year. The success of the move will then depend on whether Jet is also able to raise fares. This person also declined to be named.

The foreign airline executive quoted above said Jet should focus its energies on being a network carrier and leave the low-cost airlines like IndiGo, SpiceJet and GoAir to their respective models.

“Jet was built as a great product carrier—silver cutlery, huge cabin costs, overstaffing etc. Its response to low-cost carriers’ evolution was to repaint old Air Sahara aircraft, remove food and drop fares and was at best a jugaad (make do) sort of thing, a quick fix," he said. “More needs to be done. For instance, Jet must start to build a true domestic hub at Mumbai (already happening to some extent) and perhaps one at Hyderabad that offers the space for a hub to be built. It should remain true to itself as a network carrier by differentiating. Let LCCs do what they do best."

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