Jet Airways and Air France-KLM announced an “enhanced cooperation agreement” that would see India’s largest private carrier strengthening its commercial ties with the European aviation group beyond a code share pact.
“This agreement strengthens the partnership built between the three airlines since 2014,” the alliance partners said in a joint statement on Wednesday. Customers would benefit from multiple travel options — via the European hubs of Amsterdam and Paris and the European airline group’s transatlantic venture partner Delta Air Lines — and “seamless service” throughout the three partners’ networks spanning 44 cities in India and 106 destinations across Europe.
Adding gateways
The pact helps Jet Airways bolster its connectivity to Europe and offer its North America-bound customers more options on connections, beyond its existing equity part-owner Etihad Airways’ Abu Dhabi hub. For the Franco-Dutch combine, the tie-up helps it compete better for a bigger share of the fast-expanding Indian market against European rivals such as Lufthansa and the Gulf-based carriers.
“Air France-KLM and Jet Airways are launching the first cooperation agreement of its kind on the India-Europe market, one of the markets at the heart of the group’s strategy for the coming years,” Jean-Marc Janaillac, Chairman and CEO of Air France-KLM, was quoted as saying in the statement. “With over 12,00,000 customers carried between India and Europe by the group and our Indian partner, half of whom are traveling onward to North America, we are confirming our ambition to offer customers an enhanced network.”
Jet Airways chairman Naresh Goyal said the pact with Air France-KLM was ‘purely’ commercial and aimed at improving connectivity from India to Europe, adding that there was no equity angle to the relationship. He also asserted that ties with Etihad, which owns 24% stake in Jet Airways, remained healthy.
“We have done well with Etihad and we will continue with that role,” he said.
‘Strategic shift’
Jet Airways’ latest accord could mark a strategic shift away from its ties with Etihad, according to aviation industry consultant Kapil Kaul. “One can expect more strategic developments which could include Skyteam membership for Jet Airways and investment from Delta,” said Mr. Kaul, CEO, Indian subcontinent & Middle East, Centre for Asia Pacific Aviation (CAPA). “The partnership with Etihad will increasingly become less strategic and relevant.”
Jet Airways CEO Vinay Dubey said the agreement would help the partner airlines enhance their load factor and maximise efficiency. “This deeper cooperation also means lower airfares for cusomters,” he added.
said that Etihad was on board as far as the deeper cooperation with Air France-KLM was concerned.
For several months speculation has been rife that Jet Airways has been scouting for investment from a foreign carrier mainly Delta Air Lines which owns 10% equity in Air France-KLM with either through fresh equity infusion or replacing Abu Dhabi based Etihad Airways
Mr Goyal who faced multiple questions on this equity investment front and his relationship with Etihad said,
Answering a foreign journalist’s question on the same issue he said, “I am married. I am a Hindu and as a Hindu will continue with this marriage,” indicating that the marriage with Eithad is on.
As per Wednesday’s development the three airlines will work together to develop their commercial and product offerings which will ultimately provide multiple travel options and seamless service to air passengers throughout network of the three airlines spanning 44 cities in India and 106 destinations in Europe. The airlines together eyeing revenue of $1 billion through this deeper partnership.
With this passengers can travel by any of these airlines via multiple hubs to reach their destination faster. This
CAPA’s Mr. Kaul said the pact was a big strategic boost for Jet Airways, which would gain access to both capacity and multiple gateways.
“The development enhances market power and customer value significantly to Europe and USA. I see this a revenue positive deal for Jet. It provides them very effective competitive strength and reduces economic risks,” he added.
“Going forward we are expecting more consistency from Jet’s long haul strategy,” Mr. Kaul said, adding the airline urgently needed to bolster its capital base. Since 2005, Jet has moved from hub driven operations of Brussels first and then Abu Dhabi. Now it is heading to a multiple gateway strategy of Abu Dhabi/LHR/Paris/ Amsterdam. With new team and strategy in place and possible recapitalisation, which is critical, “I see Jet emerging stronger.”he added.
This agreement will complement the Air France-KLM and Delta Air Lines’ transatlantic partnership between Europe and North America, offering access to over 200 destinations through Delta in North America establishing a global cooperation connecting the three continents.
Besides this Air France-KLM Cargo and Jet Airways Cargo have also signed an MoU to further strengthen their cooperation in the cargo sector.
