MUMBAI: Jet Airways, India's second largest airline in terms of market share, said it has reconfigured all of its 75 JetKonnect Boeing 737s with a twin-class configuration, offering eight business class seats on every aircraft in an effort to drum up demand in an indifferent market.
Many industry experts say this is an attempt by Jet to cash in on the gap created by Kingfisher Airlines' absence on many routes - a move, they say, will eventually boost Jet's bottom line.
Jet, however, attributes this move to its positive take on the economy and flyer feedback. "The Kingfisher AirlinesBSE 3.95 % effect has been in the market for a year and a half now, but those are minor things. Our decisions are not based on those considerations," said Sudheer Raghavan, chief operations officer, Jet Airways.
"Though pundits are beating the economy down, we are very optimistic about it," Raghavan said, adding, "It is just a matter of conversion of unutilised real estate to premium real estate as seat factors on any flight would not be more than 80%. So, it makes sense to convert that 20-30% of the unutilised inventory that would positively impact bottom line."
Industry insiders say that the decision by Jet can be interpreted as an attempt to gain monopoly in market.
Jet, however, attributes this move to its positive take on the economy and flyer feedback. "The Kingfisher AirlinesBSE 3.95 % effect has been in the market for a year and a half now, but those are minor things. Our decisions are not based on those considerations," said Sudheer Raghavan, chief operations officer, Jet Airways.
"Though pundits are beating the economy down, we are very optimistic about it," Raghavan said, adding, "It is just a matter of conversion of unutilised real estate to premium real estate as seat factors on any flight would not be more than 80%. So, it makes sense to convert that 20-30% of the unutilised inventory that would positively impact bottom line."
Industry insiders say that the decision by Jet can be interpreted as an attempt to gain monopoly in market.
"Jet has been losing passengers on its no-frills airline JetKonnect (market share was just 6.5% in August). Now, Kingfisher has gone under and there's a need for a full-service airline. Jet would have a monopoly as Air India is the last option for passengers. More than improvement in yields, which may happen in any case, the move will help Jet get passengers back in its fold," said a rival airline official who didn't wish to be named.
Experts feel that there has been a reduction in business class seats by as much as 50%, even though there's a demand for premium seats.
"The demand for business class seats during peak travel period is quite high, especially in metros. We find it difficult to book business class seats as there are fewer seats. If airlines increase business class seats, it will be good since there's a demand in this category,'' said Karan Anand, head, relationships, CoxBSE -0.85 % & Kings.
"We are focusing on our bottomline, on the fundamentals of our operations and on-time performance. We want to be relevant in the Indian aviation market. We don't look at market share and seat factors because they do not walk to the bank," said Raghavan, who had a stint with Singapore Airlines before Jet's promoter Naresh Goyal roped him in.
Jet said it sees load factor firming up as it goes into the third quarter, which is a stronger quarter for airlines, and with crude prices moving up again, there's no possibility of cutting fares.
"Brent crude is at $116 today and we would be profoundly stupid to bring fares down barring a few tactical initiatives taken during the low season," Raghavan said. Strategy experts say the move by Jet to offer business class seats might help the airline regain the premium airline tag once again.
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