Smaller airlines gang up against Jet-Sahara THE FINANCIAL EXPRESS NEW DELHI, JAN 20: Stung by the Jet-Sahara deal, three small airlines Kingfisher Airways, GoAir and Indigo are toying with the idea of forming an alliance to lobby with the government for a level-playing field. According to industry sources, the move is aimed at fighting Jet's dominant position where it may control airfares at least in crucial metro destinations. The Jet-Sahara combine will account for 85% of the flights in the lucrative Delhi-Mumbai route that accounts for nearly 50% of total domestic traffic. Jet Airways will also have 50% of all parking bays while Indian Airlines will have approximately 35%.
Post-acquisition, Jet will dominate the country's two busiest airports, where it will control nearly all flights - and that too at peak hours. The small airlines met the government to demand a level-playing field or address infrastructure constraints. "For new airlines wishing to launch services between Mumbai and Delhi, overnight parking slots will be required. However, they will be severely constrained and will have to be satisfied with the limited expansion that is taking place," complained Kingfisher Airlines chairman and managing director Vijay Mallya. "The viability of any airline must depend on flying the routes where there is existing traffic. The combination of routes and parallel development of a few non-metro sectors is a viable opportunity," Mr Mallya said. "The government has a role to play in ensuring there is no route-specific monopoly," he said. Sky Is The Limit * Jet Airways will now control 85% flights on Delhi-Mumbai route * Kingfisher and Indian will get hurt most * Jet Airways could control airfare on metro routes * Traffic on four metros accounts for 80% of total traffic Addressing a press conference in Mumbai a day after the Jet-Sahara deal, Mr Mallya explained why Kingfisher had backed out of the deal earlier. "Frankly, I was nervous," he said, adding that the price he had offered was $ 200 million in cash, $ 200 million in preferred stock and $ 200 million in plain equity. While Jet had taken over Sahara at an enterprise value of $ 500 million, sources said, Sahara had liabilities to the tune of $ 175 million, implying thereby that Jet actually paid a much smaller sum of $ 325 million. Meanwhile, close on the heels of acquiring Air Sahara, Jet Airways is now in talks with low cost carrier Air Deccan to explore an operational tie-up aimed at 'leveraging synergies wherever possible'. "Both Naresh Goyal and I have agreed to go ahead with the tie-up and now our teams are exploring how and where it can be executed," Air Deccan managing director Capt Gopinath told FE. According to him, the likely areas of cooperation could be bundling of Air Deccan tickets with Jet Airways and feeding its passengers to Jet's international flights and vice versa. "The alliance is aimed at cutting costs and increase revenues. The idea is to find a technology to have a seamless marketing interface with passengers," Capt Gopinath said. However, the tie-up will also look at 'sharing of ground handling and engineering resources at airports wherever possible'. Air Deccan, he said operates out of 46 airports while Jet Airways operates out of 44 airports. Such alliances, Capt Gopinath said were common abroad as they bring huge cost savings.
