Naresh Goyal-owned Jet Airways is eager to expand the number of seat entitlements to Abu Dhabi as it will provide the Indian airline with potentially 2 million additional passengers and a base with cheap jet fuel to expand its international network.

Using Abu Dhabi as a base for its international operations offers a significant saving on fuel cost for Jet Airways. It can refuel planes at around $0.75 per litre in Abu Dhabi. The same in New Delhi would cost $1.22 per litre. A base in West Asia also makes more sense for Jet Airways, who already has 10 destinations in the region out of its total international network of 20 cities.

?Currently, Jet has to take its India-West Asia traffic via New Delhi or Mumbai, even if the traffic is generated from Tier II cities,? said a Mumbai-based analyst. ?If it gets the additional seats, it can fly passengers directly to Abu Dhabi and then onwards which makes sense as refueling is cheaper in Abu Dhabi and also the airport charges are comparitively lower.?

On an average, Jet has managed 75% seat factors on West Asian routes in the last three years. If the trend continues, Jet stands to add a further 2 million passengers if the government agrees to the demand of 54,000 seats a week or 2.8 million seats a year.

While there are obvious positives for Jet in getting seat entitlements to Abu Dhabi expanded, there are risks as well. The Indian carrier runs the risk of becoming a feeder airline for Etihad Airways and at best becoming a regional operator in the West Asia.

Goyal?s carrier and the Abu Dhabi-based Etihad have been in talks for a deal which would see the Gulf carrier invest $330 million to pick up a 24% stake in Jet Airways.

Jet denies that it is taking traffic from India to feed Etihad?s routes and the application is a purely commercial decision after evaluating ?business, tourism and travel potential? of the Indian travel market. But the timing of the application seems conspicuous and the logic seems flawed, according to some analysts.

?They want to connect 23 Tier II cities in the next three years to Abu Dhabi, apart from feeding Etihad?s routes, what purpose does this serve,? said an analyst with a Mumbai-based brokerage.

?If Etihad buys into Jet, Jet will not be allowed cannibalise and fly on Etihad?s routes out of Abu Dhabi.?

Etihad connects 86 destinations worldwide, capturing almost all major long haul routes out of Abu Dhabi. It leaves little room for the Indian carrier to utilise fifth freedom rights of flying, which allows Jet to have routes such as Koch-Abu Dhabi-Kuwait.

Jet?s fleet composition indicates further that it may end up serving as the West Asian regional arm for Etihad while the Gulf carrier concentrates on longer routes. Jet has 77 narrow-bodied planes, 59 of them are the Boeing 737 family which are ideal for domestic or regional international routes. Etihad, on the other hand, has 17 narrow-bodied planes and 46 wide-bodied plane for long haul international routes.

Unnamed Jet Airways sources have been quoted in the media saying that they plan to place a fresh order for wide-bodied planes, but with the airline reeling under R12,000-crore debt, most of which is aircraft loans, it remains unclear how it would fund such a fleet expansion.