UNI
NEW DELHI, Jan 22: A few days after the Jet-Sahara deal, three small airlines - Kingfisher, GoAir and Indigo - are playing with the idea of forming an alliance to lobby with the government for a level-playing field.
Industry experts say the move is aimed at fighting Jet's dominant position where it may control airfares in crucial metro destinations.
It may be called cartel, or just corporate understanding, or competitive win-win, or price arrangement. But the new airlines are already getting together to protect margins - rather than outdoing each other in the marketplace.
And that's something which has never happened before in the Indian aviation sector.
The Jet-Sahara combine will account for 85 per cent of the flights in lucrative Delhi-Mumbai route that accounts for half of total domestic traffic. Jet Airways will also have 50 per cent of all parking bays while Indian (Airlines) will have about 35 per cent.
Post-acquisition, Jet will dominate the country's two busiest airports where it will control nearly all flights - and that too at peak hours.
''For new airlines wishing to launch services between Mumbai and Delhi, overnight parking slots will be required,'' said Kingfisher Airlines' Chairman Vijay Mallya. ''However, they will be severely constrained and will have to be satisfied with the limited expansion that is taking place.''
''The combination of routes and parallel development of a few non-metro sectors is a viable opportunity,'' said Mallya. ''The government has a role to play in ensuring there is no route-specific monopoly.''
While Jet had taken over Sahara at an enterprise value of 500 million dollars (about Rs 2,300 crore), sources said, Sahara had liabilities to the tune of 175 million dollars, implying thereby that Jet actually paid a much smaller sum of 325 million dollars.
Meanwhile, close on the heels of acquiring Air Sahara, Jet Airways is now in talks with low cost carrier Air Deccan to explore an operational tie-up aimed at leveraging synergies wherever possible.
The likely areas of cooperation could be bundling of Air Deccan tickets with Jet Airways and feeding its passengers to Jet's international flights and vice versa. The alliance is aimed at cutting costs and increase revenues. The idea is to find a technology to have a seamless marketing interface with passengers.
However, the tie-up will also look at sharing of ground handling and engineering resources at airports wherever possible. Air Deccan currently operates out of 46 airports while Jet Airways operates out of 44 airports.
Such alliances, say industry sources, are common abroad as they bring huge cost savings.