It was a
quiet image makeover - without any frills - but Jet Airways hopes that a change
in the branding strategy of its low-cost product will also help change its
fortune.
Last Sunday,
Jet Airways phased out JetLite, the low-cost service it launched after acquiring
Air Sahara, in 2007. Instead of three brands, it will now have only a
full-service Jet Airways and a low-cost Konnect brand. The airline is using
JetLite Boeing 737s for the Konnect service keeping the former's routes and
level of service intact. JetLite has been rechristened as JetKonnect and airline
officials hope the branding will help improve yields and attract a pie of the
premium traffic, too.
Jet Airways
will be reconfiguring 19 single-class Boeing 737s from the JetLite fleet to add
eight business class seats. Currently, all JetLite planes have only economy
class seating. This will make available an additional 152 business class seats
across the network. That will be an extra 10 per cent business class seats in
Jet's domestic network.
Jet Airways chief commercial officer Sudheer Raghavan confirmed the move.
"Erstwhile JetLite Boeing 737 aircraft will also have eight-seat configuration
in the Premiere Cabin upfront. These aircraft would however, be reconfigured in
a phased manner, over a period of 12 months," he stated.
Post-merger, Jet Konnect will account for 80 per cent of all Jet domestic
flights, though the figure would vary season to season. Currently, 17 twin class
Boeing 737s and 20 ATRs planes of Jet Airways and 19 Boeing 737s from JetLite
fleet are used for Konnect flights.
For Jet, the branding exercise has come at an opportune time. Kingfisher
Airlines, which till recently was a contender for the number two slot, has
shrunk drastically and lost much of its corporate business to rivals. "As the
capacity in the market is less, all airlines are selling tickets in the higher
fare slabs," a source said.
The airline has been toying with the idea of introducing the no-frills
Konnect service on some of its Gulf routes as there is not much demand for
premium class seats, but no decision has been taken as yet.
"JetKonnect will currently operate only one international route namely the
existing service between Delhi and Kathmandu. However, as part of its management
process, the company will carry out continuous evaluations to ascertain demand
for such services. Based on demand, JetKonnect flights would be deployed further
on international routes to cope with the growth in those specific markets,"
Raghavan said.
The move to merge the two low cost brands had financial underpinnings too.
Over the last three quarters, Jet Airways posted losses as operating costs
increased on the back of fuel price rise. JetLite met the same fate with losses
in all the quarters. Airline officials admitted to investor analysts last year
that JetLite was less immune to discount pricing unleashed by the
competition.
"With Air India dropping prices, we started losing customer even at JetLite
levels, because those passengers actually found Air India much cheaper than
flying on JetLite. That's the reason why we had to drop our fares significantly
to be still relevant compared to Air India in the market," K G Vishwanath, Jet's
vice president (investor relations) had told analysts last May.
In the third quarter of FY 2012 Jet Airways lost Rs 101 crore while Jet Lite
had a loss of Rs 21 crore.
The breakeven seat factor and average revenue per passenger showed a negative
trend for JetLite in all the three quarters. The breakeven seat factor was 99.3
per cent in the second quarter.
Raghavan, however, denied that JetLite brand had limitations such as high
breakeven factor or slower revenue growth. "High seat factors have been
registered consistently for JetLite. However, we are now streamlining our low
fare product offerings to simplify brand recall serving the same market," he
said.
"Given that our low-fare, high-quality all-economy product, Jet Konnect, has
proved to be a successful model since its introduction in May 2009, we thought
it best to consolidate our products in the low-fare segment with a single brand
- JetKonnect - for enhanced brand recall," he said.
"It does not make sense to have two brands in the same segment because there
is little product differentiation," said an aviation expert. "It made sense to
merge. From a marketing perspective too there is clarity. There is no confusion
amongst passengers about these brands" he added.
On an operating level, the merger will not mean an end to JetLite as an
entity. "There will be no impact on staff and JetLite and Jet Airways will
continue to exist as two separate yet distinct legal entities, operating under
their respective operating permits - selling the JetKonnect brand. The balance
sheets and accounts of the two companies though will remain separate," Raghavan
said.
