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Jet Airways to raise domestic and near-international low-fare capacity

18-Aug-2011 10:35 AM

Jet Airways CCO Sudheer Raghavan stated the carrier aims to increase domestic low fare capacity to compete with increasing LCC operations in the domestic market (Business Standard/Live Mint/Economic Times/Reuters/Dow Jones, 17-Aug-2011). Domestic LCC capacity is expected to reach 80-85% "in five years or before" from 72% at present, Mr Raghavan said. "Low-cost aviation is a reality globally and we have to be ready to face any such demand," he said, adding: "Jet Airways is not a dogmatic carrier. We will respond and change according to market conditions." The carrier added that “India is witnessing what Europe faced five years ago with the emergence of several low-fare carriers". The airline is also considering introducing more low-fare services on short-haul international services.  He did not provide a timeframe for the services or potential destinations under consideration for the low-fare services. However, Mr Raghavan noted that the services would cover destinations within five hours' flying time from India. Jet Airways chairman Naresh Goyal similarly noted the increasing presence of LCCs noting that LCCs "have made huge inroads into the industry over the last three years". He also stated the carrier has already converted a large number of its premium services to its two low-fare units, JetLite and Jet Konnect. The carrier has previously stated it is considering merging the two low-cost subsidiaries, with this plan again confirmed by the carrier, although it has not firmed up the plans. 

Jet Airways: "It is estimated that around 70% of the capacity of the Indian domestic market falls in the no-frills low fare segment. As a result, the fares offered by the full-service carriers have dropped to match those offered by the new low-fare no-frills carriers. This has resulted in high growth rate with sharp drop in yields and escalation of the break-even seat factors. These developments have brought into question the viability of the full service business model,'' Naresh Goyal, Chairman. Source: Business Standard, 17-Aug-2011.

Jet Airways: “With growth mostly coming from the low-fare segment market in domestic volumes, we, the board and the management of the company, are urgently addressing this issue and undertaking an in-depth review of the business model, including reviewing multiplicity of ‘brands’ being offered in the marketplace, and will soon be making changes to enable us to compete more effectively and retain our dominant position in the Indian market,” ' Naresh Goyal, Chairman. Source: Live Mint, 17-Aug-2011.