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Jet-Etihad deal could deliver a big blow to Air India

Apr 26, 2013 07:44 AM IST Business Business

New Delhi: The Jet-Etihad deal deal might have brought hope to India's struggling aviation sector but it is rattled Air India. It is a double blow - it will have to fight the combined strength of Jet's market penetration in India and Etihad's global network.

The government has also increased the traffic rights between the two countries to 36,670 seats per week from the existing 13,300. This will eat into Air India's profitable Middle East routes.

"Air India, because of its moral and structural problems will suffer the most," Kapil Kaul, head of Centre for Asia Pacific Aviation, said. Passengers flying to the US can now pre-clear American customs and immigration formalities before getting on the plane.

This means when they land in they just have to pick up their luggage. This incentive puts Etihad at an advantage.

Jet Airways will fly directly to Abu Dhabi and give passengers flights options to over 80 destinations around the world. Middle eastern carriers today dominate the Indian outbound market. Emirates alone commands over 50,000 seats a week out of India.

Air India is just recovering from a shock from a series of strikes and losses that had almost crippled the airline. The government's Rs 30,000 crore bailout is there but expected in small tranches till 2021. It still has a staggering debt of Rs 43,000 crores.

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