Win-win for both Jet and Etihad airlines

Etihad will benefit more from the deal with jet as this will give the Abu Dhabi-based airline a foothold in the growing Indian aviation sector, said Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA).

The deal will also be a positive for Jet, the second biggest airline by market share after IndiGo, as this gives it capital and expertise, he added.

With debt of over Rs 10,000 crore (as on March-end 2012) piling up on the airline's books, the deal has come as a breather for Jet. “Jet Airways will get the funds to clear its debt and it will help Jet increase its share in the domestic market too.

Etihad has a strong international presence. Jet will increase its international operations through code sharing with Etihad,” said Sharan Lillaney, aviation analyst, Angel Stock Broking.

Analysts feel that the deal could re-define the airline business in India. “For Etihad, this is a big positive as it will be able to corner the Indian traffic going overseas, especially to West Asia and Singapore. The domestic and overseas traffic are inter-related. Jet Airways will also gain on passengers who fly overseas,” said Ramesh K Vaidyanathan, Managing Director, Advaya Legal.

Jet is likely to gain three-four per cent market share in the next few months.

This will happen at the expense of SpiceJet and IndiGo (which will lose one-two per cent each) and Air India, which will also lose some traffic.

 

Jet will also gain from improved Corporate Governance, more professional management and more funds. The fresh funds might be deployed by Jet for aircraft acquisition, Vaidyanathan added.

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