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Fog is Lifting for Jet Airways 2.0 But Will It Be Ready for a Timely Take-Off?

Jet Airways has ramped up hiring as it plans to fly from 2022.

Jet Airways has ramped up hiring as it plans to fly from 2022.

Whatever the case may be, Jet Airways 2.0 will enter a marketplace with formidable competition, constrained cash and an extremely price sensitive customer base.

A press release issued by the revived Jet Airways caused a fair bit of discussion. Jet indicated that it will fly its first flight from Delhi to Mumbai in the first quarter of 2022. Effectively that gives the airline less than six months to revive its air operators certificate, to lease new aircraft, to acquire airport slots that align with its network, to ramp up hiring and to relaunch.

For the airline that has been grounded for well over two years, the fog seems to be lifting. The question remains whether the runway will be clear enough for Jet 2.0 to take-off in the stipulated timeframe.

Much Movement on the Ground

While there has been much speculation around, what has been confirmed is that Jet 2.0 has indeed ramped up hiring. In addition to the 100-odd staff that were retained during the NCLT proceedings, new offers have been floated supplementing the team with another 50 folks. Though the hiring has mostly been in Mumbai, as of this writing, some have been asked to move to Delhi in line with the airline’s intention of having corporate headquarters in the National Capital Region. This likely driven by better economics that the city has to offer, a larger talent base (NCR is home to four out of six large airlines), and presumably also the ability for Jet to grow in the future as Mumbai continues to be constrained on capacity.

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With regards to fleet, Jet has been in active discussions with leasing companies and an announcement is imminent. While the choice of aircraft is not confirmed, the revival of the air-operator certificate is a strong hint as these are linked to the types of aircraft. The fact that Jet has indicated that it will continue with its training centre in Mumbai also is a potential indicator.

While Jet does have existing aircraft, the economics on these don’t quite add up. And with the advanced technology and competitors flying newer aircraft, Jet has no option but to renew its fleet. To this end, the current fleet of nine-odd aircraft are already in the process of being sold.

Interestingly, Jet 2.0 plans to fly international, which essentially means that it has to ramp up its fleet to 20 aircraft by the end of the year. Without this, the current policy does not allow for an airline to fly international. Overall, Jet 2.0 has its work cut out.

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Jet Will be Competing with IndiGo, Vistara, Others

Jet will be joining the lineup where six large airlines namely, IndiGo, SpiceJet, GoAir (now GoFirst), AirAsia India, Vistara and Air India are already competing. Of these airlines, four follow a clear low-cost strategy while two are aligned to a full-service offering. In addition, by the time Jet launches, Air India may potentially have a new owner, and a new entrant in Akasa may also join the fray. This means additional pressure on talent, pricing and soaking up infrastructure. Ironically, the NCLT ruling that delinks slots (slots are permissions given to aircraft to land and depart at certain times) to the revival of Jet effectively places it in the same situation as a new entrant.

As part of the revival and strategic planning, Jet 2.0 also has to clearly define a business model. Indications are that it will adapt its previous premium model in some avatar. But to do this, it will have to ramp up fairly fast as the premium traveller demands both schedules and frequencies. That is to get to a destination at a time of his/her choosing. If the airline does not offer a convenient time, passengers will go with the flight that does. Thus, not having a competitive schedule is not even an option.

Finally, a key question of whether frequent flyer miles from the loyalty programme (Jet Privilege) can be used. While a lot of the miles have been already used, what cannot be overlooked is the sheer success of the programme during its heyday where travellers would book on Jet by virtue of the offer. Whether this will be the case again remains to be seen. There is not clear direction on the loyalty programme yet.

Whatever the case may be, Jet 2.0 will enter a marketplace with formidable competition, constrained cash and an extremely price sensitive customer base.

International Expansion: This Time is Different

The erstwhile Jet Airways derived more than 60% of its revenue from international operations. While this may be a possible target in the medium term, it remains fraught will challenges and new complexities. For Jet 2.0, international expansion this time around will be different. For once, the grant of slots and bilateral poses a challenge. Moreover, competitors are expanding rapidly and have already built up strong positions in many markets. Finally, the post-pandemic travel may have a different requirement, which in turn impacts aircraft utilisation patterns, economics and viability.

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Industry critics point to several questions and all answers direct to more questions. Of particular interest will be the network – or the routes that the airline will fly; the aircraft that will be chosen especially those for international routes; the pricing strategy that will be used; the distribution channels that will be used; and the overall look and feel of the airline. In the background, there is also the fact that as we approach an era of vaccinated travellers, of vaccine passports and of a preference of domestic vacations over international ones – this will have to be incorporated into the airline’s plans.

In the backdrop, there are also additional legal filings by stakeholders who feel they got the short end of the stick. One of the banks has already cried foul with the settlement asking for the judgment to be quashed; employee unions have filed an appeal against the judgment; and other legal proceedings are likely. These make for hindrances and delays – both of which can significantly hamper plans especially at a time where the sector is slowly picking up. These are the challenges Jet 2.0 has to navigate through and position itself for launch.

For the time being, it seems the fog is gradually clearing for Jet Airways 2.0. However, whether this leads to sunshine or other storms remains to be seen.

Disclaimer:The author is the Managing Partner at the aviation services firm AT-TV.

(The views expressed in this article are those of the author and do not represent the stand of this publication.)

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first published:September 14, 2021, 13:28 IST