Jet Airways to spread wings

Written by Shaheen Mansuri | Mumbai | Updated: Jun 23 2010, 04:33am hrs
After keeping on hold route expansion plans for over a year, Jet Airways is currently evaluating new routes in certain resilient economies buoyed by sustained recovery in business and economy air travel.

Jet chief commercial officer Sudheer Raghavan told FE, We are evaluating newer routes. However, it is too early to say which routes we are likely to add to our existing network. In 2008-09, Jet Airways had to drop the Mumbai-Shanghai-San Francisco route and later the Amritsar-London route after load factors dropped significantly on these routes. These routes contributed to nearly half of Jet's international losses in September 2009 quarter. The airline suffered a pre-tax loss of Rs 289 crore on international operations during the period. Raghavan had said, We are increasingly adding short haul routes, which will improve our network connectivity and contribute to the overall network. More recently, we have added a short haul route which includes Thiruvananthapuram-Dammam and Mumbai-Johannesburg.

The carrier, of late, has seen its load factors on the UK route touch 90%. Also, seat factors on routes in the Gulf, Asean, Saarc, the US and European sectors, where Jet operates, have averaged at around 80%. Currently, Jet operates 85 international flights daily.

A recent report by IDFC Securities states that with Jet's strong domestic network capabilities supporting the airline's traffic on international routes, the carrier has a relatively de-risked business model. With seat factors stabilising at 80%, all routes except the US and the UK are currently profitable. While there has been an improvement in yields in the front end business class seats, which is approximately 16% of the capacity, the economy class remains price sensitive.