New Delhi: On a day when Jet Airways has managed to get itself a rather good deal from Etihad Airways, at least in terms of valuation, it would be interesting to find out how this deal will alter the very face of Jet Airways.
What may have finally worked in Goyal’s favour is the haste with which the Ministry of Civil Aviation agreed to open negotiations with Abu Dhabi, where Etihad is headquartered, on increasing weekly seat entitlements for the carriers of both countries by four-fold.
A team led by joint secretary Prabhat Kumar Singh is in Abu Dhabi since Monday night and has been conducting these negotiations despite stiff opposition from all stakeholders who fear such massive seat entitlements to Abu Dhabi will make other Indian airlines and expensive airport infrastructure uncompetitive.
But for Jet, these negotiations are a lifeline. Because its very future seems to depend on two things: a profitable deal with Etihad which provides it much needed cash and permission to expand globally by making Abu Dhabi a major hub.
Airline sources told Firstpost that if it does get permission to offer 42,000 seats a week to Abu Dhabi, it will gain immensely:
1) Jet says the market size of traffic to and from countries to the west of India is about 28 million passengers per year. This includes traffic from the Gulf, Middle East, Europe, Africa and the Americas. “We want a share of this traffic. It is already growing a 10% per year and in three years, this traffic will become almost 40 million passengers.”
2) Jet says it is only looking to corner 10 percent of this traffic or four million passengers by 2015-16 but here’s the catch: this traffic will be ensnared by establishing a hub not in any Indian airport but at Abu Dhabi.
3) Jet wants to connect 23 points from India to the Abu Dhabi hub for onward connections so that it expands not only globally but also within the country.
4) For such massive expansion, Jet will obviously also need to buy more aircraft. The sources said it will get back 5 leased B777 aircraft from Thai Airways and Turkish this year.
24/04/13 Sindhu Bhattacharya/First Post.com
