Opinion- Jet- Playing its cards in the Middle East

Jan 23, 2013
By- Yash Patel
(Mumbai-based Yash Patel is an analyst with a focus on airline finance, strategy and restructuring)
The views published are of the writer alone and not of AerospaceDiary.

Credit:20twentytwo

ANALYSIS

Jet Airways

• Jet Airways already has an existing codeshare agreement and extensive frequent flyer program/collaboration with Emirates Airlines and Etihad Airways.
• Jet Airways and Emirates recently announced renewal of their respective codeshare agreements.
• Jet Airways and Etihad Airways recently announced extension of their codeshare agreement on Abu Dhabi-Paris route.
• Brussels Airlines (Lufthansa has a stake of 45% with approval to further invest in the carrier) is Jet Airways’ existing European Codeshare partner at its scissor hub in Brussels. Both airlines are members of Star Alliance. Jet Airways has been granted additional flying rights to Europe, especially on the India-Frankfurt/Munich routes.
• Extensive Domestic Network and International Network (including codeshare agreements in all geographic regions)
• Codeshare Partners:
• Star Alliance – Air Canada, All Nippon Airways, Brussels Airlines, United Airlines
• One World – American Airlines, Malaysia Airlines, Qantas Airways 
• Skyteam – Kenya Airways
• Non-Alliance – Emirates Airlines, Etihad Airlines
• Codeshare Partners By Geographic Location :
• Africa – Kenya Airways
• Asia – All Nippon Airways, Malaysia Airlines
• Australia – Qantas Airways
• Europe – Brussels Airlines
• North America / South America – Air Canada, United Airlines, Emirates Airlines, Etihad Airways
• 
  
• Kingfisher Airlines

• Kingfisher Airlines has a suspended license; the entire fleet has been grounded and un-serviced for few months, manpower issues, pending payments to staff/creditors, etc.
• Codeshare Partners:
• Star Alliance – Asiana Airlines
• One World – American Airlines
• Non-Alliance – Philippine Airlines

 Emirates Airlines

• Emirates already has an existing codeshare agreement and extensive frequent flyer program collaboration with Jet Airways.
• Emirates is not interested in buying any stake in any airline worldwide and has expressed the same
• Emirates has recently announced a strategic alliance with Qantas Airways with Dubai to be the new hub for both carriers for direct flights to/from Australia. This will allow Emirates       gain further access to Qantas Airways domestic network and allow Qantas Airways to have codeshare on various routes on Emirates Airlines network especially in Europe, North America, South America, etc.
• Qatar Airways
• Qatar Airways is all set to join One World Alliance by August 2013.

Etihad Airways

• Etihad  already has an existing codeshare agreement and extensive frequent flyer program collaboration with Jet Airways.
• Etihad and Jet recently announced extension of their codeshare agreement on Abu Dhabi-Paris route.
• Etihad Airways is well known for strategic share purchases in many carriers, which also allows for management decision-making capacities, codeshare/frequent flyer programme agreements member airlines network, etc. Such carriers in which Etihad Airways owns stake include:
• Air Berlin (29%) – Member of One World
• Air Seychelles (40%) – Major codeshare agreement with Air France (Skyteam Member)
• Aer Lingus (3%) – Previously a member of One World, now has codeshare agreements with all alliance members.
• Virgin Australia (10%) – Singapore Airlines (Star Alliance) de-invested 49% stake which was later purchased by Delta Airlines (Skyteam). Currently Delta Airlines and Virgin Australia both have cooperation on trans-Atlantic flights.

• Codeshare Partners:
• Star Alliance – Air New Zealand, All Nippon Airways, Asiana Airlines, Brussels Airlines, China Eastern Airlines, TAP Portugal, Turkish Airlines
  
• One World – Air Berlin, American Airlines, Malaysia Airlines, Niki, S7 Airlines, Sri Lankan Airlines,
  
• Skyteam – Air France, Alitalia, Czech Airlines, Garuda Indonesia, KLM, Middle East Airlines, Saudia, Vietnam Airlines
  
• Non-Alliance – Aer Lingus, Aer Lingus Regional, Air Astana, Air Malta, Air Seychelles, Bangkok Airways, Cyprus Airways, Flybe, Hainan Airlines, Jet Airways, Kuwait Airways, Nas Air, Olympic Air, RAK Airways, Philippine Airlines, Royal Air Maroc, Safi Airways, Virgin Australia.

CONCLUSION

Jet Airways – Etihad Airways

• If Etihad Airways buys a stake in Jet Airways,a major contender to join Star Alliance, then it is also likely that Etihad Airways has a front chance to join Star Alliance as they do not have any major partner from the Middle East region. This move may allow Jet Airways to shift its international European hub at Brussels to Abu Dhabi perhaps.
• Major codershare partners of Jet Airways are all Star Alliance members, whereas Etihad Airways has a mix of members from all three major alliances. This would need to be further looked into by both parties keeping in mind that Jet Airways’ European Hub at Brussels is Star Alliance ruled by Brussels Airlines and Lufthansa, both having extensive strategic alliance with Jet Airways.
• Recently, Jet has been granted extensive routes on the European sector, especially between India-Frankfurt/Munich which is Star Alliance hubs. This clearly shows that Jet Airways is a front contender for joining Star as a potential member as it has been granted slots at Munich Airport.

Kingfisher Airlines – Etihad Airways

• If Etihad Airways buys a stake in Kingfisher Airlines, this move can upset its Middle East competitor Qatar Airways all set to join One World by August 2013. Kingfisher had already announced its interest in One World, before its collapse. Thus, this move can pull out Kingfisher from One World if the management decision making power lies within Etihad Airways.

Kingfisher Airlines – Qatar Airways

• Since One World does not have any major alliance partner on the Indian subcontinent, Qatar Airways has the potential to invest in Kingfisher Airlines and pull it back as on track to ensure its entry into One World does not die out.
• However, Qatar Airways would need to be very careful as Kingfisher Airlines has a suspended license; the entire fleet has been grounded and un-serviced for few months, manpower issues, pending payments to staff/creditors, etc.

Overall

• With Emirates Airlines not joining any airline alliance and keeping a low codeshare partnership portfolio, Qatar is all set to join One World, Etihad Airways has various options to join Star Alliance or Skyteam respectively.
• All above factors would play a big role in making the right investment in an Indian airline.