1. Jet Airways flying high on international operations

Jet Airways flying high on international operations

In FY16, Jet Airways managed to report annual profit for the first time in the last few years, largely because of its international operations.

By: | Mumbai | Updated: June 11, 2016 8:04 AM
Jet Airways also changed its European gateway to Amsterdam from Brussels, and it has significantly increased revenue generation. Jet Airways also changed its European gateway to Amsterdam from Brussels, and it has significantly increased revenue generation.

In FY16, Jet Airways managed to report annual profit for the first time in the last few years, largely because of its international operations. In the January-March quarter, international revenues contributed around 55% to its
total revenues.

The yields on international routes also increased by 1% Y-o-Y, while the same on the domestic routes decreased by 4.1%.

Ever since Etihad Airways bought a 24% stake in the airline in 2014, the international business has been growing steadily. Passenger revenues stood flat at Rs 2,489 crore from international routes, but earnings from ancillary services rose, with available seat kilometers (ASKM) increasing by 3.1%.

At a time when the airline has lost a bit of market share to the low-cost carriers such as Indigo and SpiceJet, the international business has been the mainstay of the Mumbai-based full service carrier.

Jet Airways also changed its European gateway to Amsterdam from Brussels, and it has significantly increased revenue generation.

“We shifted operations from Brussels to Amsterdam and launched daily flights from Mumbai, Delhi and Toronto.

This move was on account of Amsterdam offering better connectivity to the US, Canada and Europe. These operations have had a strong start with promising revenue performance,” said Amit Agarwal, acting chief executive, Jet Airways.

The code-sharing with airlines across Europe and the Gulf region has helped Jet Airways offer a host of new options and destinations to its passengers. This move has also helped increase revenues from the international operations.

Overall traffic from code-sharing with other airlines increased by 21% and traffic from code-sharing with Etihad and other partner airlines grew by 45% during the quarter.

“The entry of Etihad, along with its partner airlines, and code-sharing with other airlines have helped Jet sustain its international operations and improve its connectivity. If oil prices remain subdued, Jet can improve its profitability,” said an aviation consultant.

Jet Airways also entered into a code-share agreement with Korean Air and entered into a frequent flyer partnership with Bangkok Airways. The full service airline will take back its leased wide body aircraft from Etihad. It will be deployed on  international routes which will help increase capacity and revenues.

“Our wide-body aircraft currently on lease to Etihad Airways will return and be operationalised, starting August 2016. Based on the market condition, our plan is to upgrade some of the existing 330 routes with the Boeing 777s coming back. This will subsequently result in additional capacity deployment in our core markets of India and the Gulf,” said Agarwal.

Tags: Jet Airways
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