NEW DELHI: Realising that the economic slowdown has put low-cost carriers (LCC) at an advantage over full service ones, Naresh Goyal-owned Jet Airways has decided to expand its budget segment. The airline, which runs Sahara-turned-JetLite as its LCC, is now introducing another all-economy service – Jet Airways Konnect. Jet Konnect will operate 54 flights daily on 19 routes, connecting 38 cities with Jet livery from Friday. Jet Konnect-plus-JetLite will account for 45% of the group’s entire capacity.
LCCs enjoy nearly 40% of domestic market share, and it’s on the rise. This segment is led by IndiGo, followed by SpiceJet, JetLite and Deccan-turned-Kingfisher Red. Jet’s new brand, a no-frills, low-fare venture, where passengers will have to buy meals, will initially be operated with two Boeing 737s and six ATRs. Initially, Konnect will cover sectors like Chennai-Coimbatore, Madurai-Kochi, Mumbai-Ahmedabad/Bhopal/Udaipur and Bangalore-Pune/Mangalore.
Jet’s chief commercial officer Sudheer Raghavan said, “The full service flights on these sectors are getting only 50% seat factor. A lower fare would help us increase that.” Raghavan said while there was a lot common in the operational models of the two – JetLite and Konnect – there would be no overlapping as far as routes were concerned.
“There would hardly be any overlap between JetLite and Konnect. And even if there is any, we will ensure that the timings are such that there is no confusion and no cannibalisation,” the airline official said. Admitting that the slowdown had forced the airline to replace its full-service carrier with an all economy-class service on certain routes, Raghavan said, “Recession has played a significant part in this decision. But when there is a demand for a full service, we will definitely re-start it.”
Jet has drawn up plans for JetLite too. The budget carrier currently has a fleet of 23 aircraft – 16 Boeing 737s and seven CRJs. From 2009-end, 20 new planes, a mix of CRJs and ATRs, will join the fleet of JetLite in next three years.
Jet’s decision has come at a time when the slowdown has dealt a body blow to travel industry in general and airlines in particular. Relatively new LCCs like IndiGo and SpiceJet have been able to wean away fliers from full service ones. The Centre for Asia Pacific Aviation in a report predicted that there was hardly any market for full service domestic airlines beyond the six metros and that the future belonged to budget carriers.
Two independent budget carriers have been able to wean away a sizable chunk of the market as Jet and Kingfisher are still grappling with issues arising out of the acquisition of low cost carriers – Sahara and Deccan. “Jet and Kingfisher need to strengthen LCC business. Air India does not have a separate domestic low cost airline and does some domestic legs only as party of AI Express’ international flights,” said an airline official.
Source : Times Of India 08/05/09