At a time when most of the domestic airlines are trying to expand capacity and networks, Jet Airways — the country's second-largest full service airline...
At a time when most of the domestic airlines are trying to expand capacity and networks, Jet Airways — the country’s second-largest full service airline — has decided to consolidate its existing position by maximising aircraft utilisation rather than adding more planes.
The carrier has decided to expand at a prudent pace on profitable routes while increasing revenues from international operations by code-sharing with Etihad and other foreign airlines.
Despite not adding any new aircraft, Jet Airways has managed to increase the number of passengers by 15% to 1.91 crore during the first three quarters of FY16, as utilisation of the Boeing 737 aircraft has increased to 13.07 hours. Overall, the number of flying hours for every aircraft in the fleet increased to 12.8 hours from 11.9 hours.
The turnaround time of planes has been reduced, which is helping the airline operate more flights, and as a result carry more passengers. Recently, the full service carrier decided to increase its flights to Bangkok and Dubai from its hubs in Delhi and Mumbai to tap more passengers during summer holidays.
“We expect Jet Airways to deliver healthy profits given healthy passenger growth, low oil prices and focus on improving operational efficiency. Further, focus on consolidation and retiring high–cost debt will improve balance sheet quality,” Edelweiss Research said in a note on the company.
While most of the airlines are planning to expand on the back of subdued oil prices, Jet has managed to cut down on its expenses related to aircraft rentals, maintenance and employees during the December quarter compared to the previous one.
On the operations front, the airline has managed to increase revenues from overseas operations and in the last quarter it contributed 59% of total revenues. The European hub of the airline has been changed from Brussels to Amsterdam to be effective from March.
According to an aviation expert, change of the hub to Amsterdam was a strategic call, as it will help the airline carry more passengers to the United States due to its code-sharing agreement with Delta Air and Royal Dutch Airlines.
This move may further help increase code sharing traffic and as a result the revenues.
Overall, code-share traffic witnessed growth of 28% Y-o-Y to 534,104 passengers in the third quarter, with code-share traffic with strategic alliance partner Etihad Airways and its partner airlines growing by 86% during the same period.
The airline is expected to get delivery of 72 Boeing aircraft in 2018 and by then it is expected to consolidate operation in domestic and international routes.
Jet Airways has reported profits during three consecutive quarters on the back of subdued oil prices. In the third quarter of FY 16, the net profit rose by 1510% Y-o-Y to Rs 467 crore from Rs 29 crore.