Challenge to Etihad as Jet Airways, Air France-KLM announce partnership to increase connectivity to Europe

To tap into India's booming international air traffic, Jet Airways and Air France-KLM has announced "enhanced cooperation agreement" to increase the number of flights to Europe, especially Paris and Amsterdam, and expand further connectivity to the United States. The partnership between the two could, however, hurt the business prospects of major Gulf career Etihad Airlines, which owns 24 per cent stake in Jet Airways, but the pact would help Jet Airlines expand its footprints.

The agreement signed in Mumbai on Wednesday also includes Delta Air Lines, with which Air France KLM has an existing partnership. Many international airlines are tying up on international routes in face of increasing completion, and to reduce expanse. Jet Airways was eying to increase footprints in Europe for long. In September, Jet's Chief Financial Officer Amit Agarwal said that there was "continued weakness in the Gulf market both on the demand as well as yield. And flights into Amsterdam and Paris are a brighter spot."

However, Jet Chairman Naresh Goyal said the current partnership would not be affected due to the partnership with Air France-KLM, and that Jet's "great relationship with Etihad" would continue. Under its previous CEO, James Hogan, Etihad had invested in Jet Airways as part of an aggressive strategy of growing its Abu Dhabi hub by taking stakes in other airlines that would funnel traffic to the United Arab Emirates.

Etihad was not immediately available for comment. CAPA Centre for Aviation senior analyst Will Horton said the Air France KLM partnership was a "textbook example" of the downside of Etihad having only a minority investment in Jet. "Under the new/expanded deal, Jet Airways will do more flying on its own compared to the Etihad deal. That boosts revenue," he said. "Jet's widebody fleet will also be better utilised - that's also good for Jet."

Besides, the airline is also focusing on cost-cutting and profitability. On November 21, Jet Airways said it planned to do away with first class seats in its Boeing 777 planes that were operated for long-haul flights as part of its cost-cutting measures. The carrier has 10 B777 aircrafts and they have eight first, 30 business and 308 economy class seats.

The airline plans to increase the number of seats in B777 planes to around 400 seats from 346 seats till 2019.  Jet Airways has a fleet of over 110 aircraft, comprising B777-300 ERs, A330-200/300, next generation B737s and ATR 72- 500/600s. It has 21 code share and 107 interline partners and about 15 per cent of the carrier's passenger feed comes from partners. Code sharing allows an airline to book its passenger on partner airlines and provide seamless transport to destinations.
With agency inputs