Jet Air-Kingfisher pact finally takes off

MUMBAI: After an eight-month delay, the alliance between the country���s two largest private carriers, Jet Airways and Kingfisher Airlines, finally took off on July 1. ���To start with, both the airlines have started sharing infrastructure at the domestic airports that include Delhi and Mumbai,��� a senior Kingfisher Airlines official told ET on condition of anonymity. (Watch)

Apart from infrastructure sharing at airports, the code sharing between the two airlines will start this month. ���The infrastructure and code sharing will reduce Kingfisher���s operational costs by 20-30%,��� added the official. According to an official at Jet, code sharing on domestic and international flights will start soon, apart from joint fuel management and network rationalisation. E-mails and text messages sent to spokespersons of both companies remained unanswered.

Last October, Vijay Mallya and Naresh Goyal signed an agreement to significantly rationalise capacity and reduce costs at a time when prices of jetfuel had hit record highs. Landing and parking charges are high in India. Besides, jetfuel prices have moved upwards in the last two months. ���All this has forced Kingfisher and Jet to look for ways to reduce costs,��� said an analyst with a domestic brokerage firm.

Both the airlines have a large debt component on their books, apart from having been in the red. Jet���s debt is $3.1 billion and had a standalone net loss of Rs 402 crore for FY09. Kingfisher���s loss stood at Rs 626 crore in the third quarter of FY09 from Rs 423 crore for the same quarter of FY08. ���The airline business in India in terms of profitability faces an uphill task due to high charges that are paid out for operations,��� said Raajeev Batra, head of transport advisory services, KPMG.

For FY09, the aviation industry incurred losses of around Rs 10,000 crore.