Jet may find acquisition difficult to handle

Mumbai: Analysts feel that if the deal goes through, in the short run, Jet may find it difficult to stomach the acquisition. A few years later though as synergies begin to seep in, it could begin to profit from the deal.
One area could be the fact that both airlines have more or less similar fleets. Jet has 62 aircraft built by Boeing while Sahara has 20 in a fleet of 27. A common maintenance base and route rationalisation could cut down operational costs.
Add to this the fact that Jet will have more craft in its fleet to take advantage of a market bursting at its seams while its rivals will have to wait at least 3-4 years before the carriers they have ordered for are delivered. Air India, for instance, will have to wait until 2009 before it gets brand new machines.
Then there is the fact that the airline will fly more international routes. A larger fleet will give it a greater advantage. On average, flying international routes gives the airline a yield of Rs 16,290 — three times what it could get by flying a domestic passenger at Rs 5,570.
Naresh Goyal, who started Jet with just Rs 3 crore 15 years ago, can also redeploy Sahara Jet on the domestic routes and use the latest machines to fly passengers overseas taking advantage of an early lead ahead of its rivals.
Goyal's arch rival, Vijay Mallya, who was in the race for Air Sahara, has already registered a company in the US to fly into India. This is to get around domestic regulations that do not allow an Indian carrier to fly abroad until it completes five years on domestic routes.
11/04/07 Baiju Kalesh/Times of India

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Categories: Air Sahara Apr 2007, Jet Airways Apr 2007