Jet eying low-fare market, moving for makeover

Airline is planning to sell planes and get them back on lease to generate additional capital


Sweta Ranjan | January 24, 2012

Grounded by losses, Jet Airways plans to merge one of its subsidiaries, the budget airlines Jet Lite with another, Jet Konnect. The move is being seen as a business plan to revive the sinking Jet Lite. The company had acquired loss-making Air Sahara in 2007, branding it as Jet Lite.

Jet is believed to be trying to emulate rival IndiGo’s success in the budget air travel industry with the move. IndiGo has captured nearly 20 percent of the air travel market, flying past the biggies. Even the other budget airline Spice Jet, which has the second largest market share, holds 16.1 percent of the market, according to the data from the third quarter of the financial year.

Jet, shifting its focus to the low-fare market, wants to run its budget flights under a single brand. However, Jet Lite will be retained as a legitimate entity, while a shell company will be created to own and operate its planes under the Konnect banner.

As per the makeover plan, the Konnect brand is set to add 20 more planes to its fleet by the end of the year. And like Indigo, each plane will be 180-seater carrier. To brook losses, Jet also plans to sell off nine Boeing 737 planes it owns. A source from the airline company says that the aircraft will be sold and then get them back on lease in order to raise around Rs 666 crore to repay debts. In the quarter ending December 31, Jet’s losses stood at Rs 13,942 crore. The arrangement of selling and leaseback is done in order to generate additional capital. This move also helps reflect a healthier balance sheet as debts on the planes’ purchase are struck off the books. their books.




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