Partnership To Include Route-Sharing, Cross-Training On Fleets

Citing the sharp downturn in the global economy, two Indian airlines announced Monday they will join forces in order to survive. Jet Airways and Kingfisher Airlines announced an alliance that both carriers hope will "significantly rationalize and reduce costs and provide improved standards of service and a wider choice of air travel options to consumers with immediate effect."

The alliance will allow Jet and Kingfisher to codeshare on both domestic and international flights, subject to approval by Indian aviation authorities. Both carriers will also combine networks where allowed, and manage their fueling needs as a single entity. The airlines also plan to combine crew training practices, and will cross-train flight crews on each other's planes.

Those steps sound a lot like a formal merger... but despite the alliance's scope, both airlines stress this is not a full-fledged joining of the two carriers. At least, not yet.

Both airlines will maintain their separate legal and brand entities, though representatives add both Jet and Kingfisher will examine co-branding opportunities down the line. The airlines have also formed a "core committee of senior management personnel" to discuss further actions down the line.

"The two airlines will be able to rationalize their operations and derive the maximum synergies and thereby offer the best possible fares for the benefit of the consumers," a joint release states. "However, there will not be any mutual equity investments between the two companies."

"All over the world Airlines have formed alliances in order to become more efficient, improve revenues and provide seamless travel opportunities for their customers.  India has witnessed tremendous growth in the past which has slowed down considerably," said Naresh Goyal, Chairman of Jet Airways. "In this environment the Jet Airways – Kingfisher alliance represents a completely new industrial model for aviation in India which would be based on an unprecedented depth of cooperation between the two companies. There will be huge cost savings and revenue enhancement opportunities arising from this alliance."

Based in Mumbai, Jet Airways was incorporated as a full-fledged passenger airline April 1, 1992. Today, it is the second largest international airline operating in India, and the largest domestic carrier. The airline operates a mix of Airbus and Boeing planes, including A330-200s and Boeing 777-300ER aircraft. Jet also has 10 Boeing 787s on order.

By comparison, Kingfisher was formed in 2005, and flies an all-Airbus fleet of leased A320, A330 and A340 planes. The airline -- founded by Vijay Mallya, the flamboyant chairman of beverage supplier UB Group -- also has several Airbus A350 XWBs and A380s on order.

"This is a quantum leap forward in the evolution of Indian aviation which will benefit customers by delivering the most comprehensive integration in the industry," Mallya (below) said. "Both Jet and Kingfisher fully realize that better understanding of supply and demand in this capital and labor intensive industry is the key to profitability and enhancement of shareholder value. I look forward to this alliance delivering superior quality, cost savings, flexibility and enhanced consumer value which is the hallmark of all successful alliances."

Both airlines maintain the merger -- er, alliance -- is in the best interests of the Indian public, and that country's aviation industry. "Civil aviation is the keystone of infrastructure development and a key priority of the Indian Government for the development of the economy," the airlines state. "The proposed alliance between Jet Airways and Kingfisher is in the national interest by incorporating the international best practice to strengthen the Indian aviation industry.

"The alliance will also enable a stabilization of the Indian aviation industry in the larger public interest for the benefit of the customer during the current downturn of the world economies."

FMI: www.jetairways.com, www.flykingfisher.com