Jet has been struggling with the positioning of its second airline for long now, in fact ever after it acquired the airline from Sahara Group.
The Ministry of Civil Aviation on Wednesday said it has not approved the scheme of merger of JetLite, the wholly owned subsidiary of Jet Airways, with the parent company, and that the two companies will continue respective operations as separate legal entities with their respective air operator permits or AOPs. The ministry’s decision, however, is not likely to hurt Jet Airways and will not have any negative impact, aviation experts say. “JetLite was just the fleet with cabin and cockpit crew, but the entire operational, administrative and airport functions were already taken over by Jet and this directive of the ministry will not hurt Jet in any negative way,” said KG Vishwanath, an independent aviation consultant. Vishwanath questions the Jet’s move to merge JetLite with itself and terms it as not a very ‘wise’ one.
In 2015, Jet Air had approached the shareholders to approve such a merger as it wanted to draw upon synergies between the two operating companies and achieve operational efficiencies. Since then, the two entities have been working in coordination for the planning of routes and cross selling. The process of merger was approved by the Mumbai High Court subject to a go-ahead by the regulatory authority. But after the directive of the Ministry of Civil Aviation to the airline on Wednesday, the move gets stalled. The airline had stated then that post merger, existing equity shares of Jet Airways and its nominees in Jet Lite will stand cancelled without any financial consideration, and Jet Lite will stand dissolved without winding up, and importantly, its AOP will be retained as a separate division of Jet Airways. Jet promoter Naresh Goyal has always insisted on maintaining a separate AOP for JetLite despite the two airlines achieving brand synergies.
Jet has been struggling with the positioning of its second airline for long now, in fact ever after it acquired the airline from Sahara Group. In 2007, as a result of the takeover of erstwhile Air Sahara of the Sahara Group after a protracted legal battle, Jet created a low-cost entity, JetLite, at that time with 19 Boeing aircraft as assets, connecting 31 domestic destinations. Later, in 2009, as part of a strategic re-branding and restructuring, Jet Airways said effective March, its low-cost arm JetLite would cease to operate after being merged with the other no-frills brand, JetKonnect, as competition from Air Deccan made the carrier reassess its low-cost strategy, as Deccan, promoted by Capt Gopinath, was fast capturing the market. Jet, however, said on certain routes, Konnect will offer full service.
By: Manisha Singhal