It is a clear sign of desperate times. Two of the fiercest rivals for control of Indian skies, Jet Airways and Kingfisher Airlines, embarked on an extraordinary move to work out an operational alliance in a bid to rein in runaway losses.
Following marathon meetings between Kingfisher chairman Vijay Mallya and his Jet Airways counterpart Naresh Goyal over the weekend, the two companies on Monday announced an alliance, which includes sharing of codes on domestic and international flights, leveraging the joint network, joint fuel management, common ground handling, cross-selling of flight inventories, network rationalisation, cross-utilisation of crew, reciprocity in Jet Privilege and King Club programmes. The proposed code-sharing is subject to the approval of the Director General of Civil Aviation (DGCA).
This alliance represents a completely new industrial model for aviation in India, which would be based on an unprecedented depth of co-operation between the two companies. There will be huge cost savings and revenue enhancement opportunities arising from this alliance. However, the companies did not quantify the amount that the alliance would save.
In the current environment of high costs and declining margins, the two bleeding airlines, which together accounts for over 60% share of India’s aviation market, have clinched the alliance to prune their combined daily loss - estimated in the region of Rs 15-20 crore - that seriously undermined the cash flow.