Jet Airways: Difference between revisions

Jet Airways
	File:Jet-Airways-Logo.gif
Founded	1993
Hubs	Chatrapati Shivaji International Airport; Indira Gandhi International Airport; Brussels Airport
Focus cities	Chennai; Kolkata; Bangalore
Frequent-flyer program	Jet Privilege
Fleet size	77 + (41 orders) + 24 Jet Lite + (10 orders) = 152
Destinations	43 Domestic ; 15 International
Parent company	Tailwinds Limited
Headquarters	Mumbai
Key people	Naresh Goyal, founder and chairman
Website	http://www.jetairways.com

Jet Airways
	File:Jet-Airways-Logo.gif
Founded	1993
Hubs	Chatrapati Shivaji International Airport; Indira Gandhi International Airport; Brussels Airport
Focus cities	Chennai; Kolkata; Bangalore
Frequent-flyer program	Jet Privilege
Fleet size	77 + (41 orders) + 24 Jet Lite + (10 orders) = 152
Destinations	43 Domestic ; 15 International
Parent company	Tailwinds Limited
Headquarters	Mumbai
Key people	Naresh Goyal, founder and chairman
Website	http://www.jetairways.com

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Revision as of 04:34, 10 February 2008

Jet Airways (India) Ltd. is an airline based in Mumbai, India, operating domestic and international services. It operates over 355 daily flights to 43 destinations across the country and 15 overseas. Its main base is Chhatrapati Shivaji International Airport in Mumbai. Jet Airways other major hubs are located at Indira Gandhi International Airport, Delhi, Anna International Airport, Chennai, Netaji Subhash Chandra Bose International Airport, Kolkata, Bangalore International Airport, Bangalore, and Brussels Airport, Brussels.^[1]

According to March 2007 available figures, its share of India's domestic aviation market increased to over 43% (up from less than 27% a few months prior to March 2007), and, as of 2007, is greater than any other Indian domestic operator's market share.^[2] Jet Airways was voted as the best airline in South Asia and Central Asia region by Skytrax in 2007.^[3]

History

Jet Airways was incorporated as an "air taxi" operator on 1 April 1992. It started commercial airline operations on 5 May 1993 with a fleet of 4 Boeing 737-300 aircraft. In January 1994 a change in the law enabled Jet Airways to apply for scheduled airline status, which was granted on 4 January 1995. It began international operations to Sri Lanka in March 2004. Plans to acquire rival Air Sahara, announced in January 2006, after some rough patches deal got through. The airline is owned by Tailwinds (owned by Naresh Goyal) (80%) and public shares (20%) and has 10,017 employees (at March 2007).^[1]

Naresh Goyal, who already owned Jetair (Private) Limited (which provided sales and marketing for foreign airlines in India) set up Jet Airways as a full-service scheduled airline that would give competition to state-owned Indian Airlines. Indian Airlines had enjoyed a monopoly in the domestic market between 1953, when all major Indian air transport providers were nationalised under the Air Corporations Act (1953), and January 1994, when the Air Corporations Act was repealed, following which Jet Airways received scheduled airline status. ^{[citation needed]}

Jet Airways and Air Sahara were the only private airlines to survive the Indian business downturn of the early 1990s. In January 2006, Jet Airways announced that it would buy Air Sahara making it the biggest takeover in Indian aviation history. The resulting airline would have been the country's largest^[4] but the deal fell through in June 2006. However, a modified deal went through in January 2007.

Lower wages in India compared with the West are not the only explanation for Jet Airways' relatively low cost base by international standards. The company has also been able to lower its costs by "sweating its assets", i.e. getting the maximum utilisation out of its aircraft fleet by minimising turnaround times between flights, similar to the leading European/North American low-cost, "no frills" carriers. This has partly helped it to offset the high costs of the airport infrastructure as well as jet fuel in India, which are higher in India than the international average. ^{[citation needed]}

Brand ownership

^{[citation needed]}

Jet Airways does not own its brand. The brand is owned by Jetair Enterprises Ltd., a separate company substantially owned by Naresh Goyal, which licenses the brand to the airline in return for an annual payment. This arrangement is very similar to the terms governing the use of the "easy" brand by the easyJet Airline Company Limited (the name under which easyJet has been incorporated). Under the aforesaid arrangement, Sir Stelios Haji-Ioannou, the founder and largest individual shareholder of easyJet Airline Co. Ltd. has sole ownership of the "easy" brand and licenses it to that airline for a specified payment. This kind of arrangement is of vital importance should the concerned airlines become the subject of a hostile takeover bid because the bidder[s] will not automatically acquire ownership of their takeover target's brand and without access to the brand the takeover target will be less valuable.

Controversies

It took Jet Airways more than two years to get the necessary clearances from US authorities to fly to the United States. The US State Department gave the go ahead on November 15,2006.

Jet was expected to begin service to Newark via Brussels in June 2005 but a problem arose in March 2005, when the airline submitted an application to the U.S. Department of Transportation. Nancy Heckerman, CEO of US company Jet Airways Inc. based in Bethesda, Maryland, opposed the application in letters to the Transportation Department alleging trademark infringement. Though the litigation is still unresolved, the Department of Transportation concluded it was not a reason to prevent Jet from flying to the U.S.^[5]

A second and more serious allegation that delayed Jet Airways being permitted to fly to the USA focused on its opaque ownership structure as well as its alleged links to organised crime in India and abroad. Jet Airways was originally set up as a subsidiary of Tailwinds, an Isle of Man based holding company designed as a tax shelter, whose sole shareholder was Naresh Goyal, the airline's NRI founder and chairman. Initially, both Gulf Air and Kuwait Airways had acquired minority stakes in the airline. However, the Government of India subsequently decreed that foreign airlines would not be allowed to own any shares in any Indian airline (though other foreign entities and individuals could still acquire/own minority stakes in Indian carriers)^{[citation needed]}.

As a result of this ruling Gulf Air and Kuwait Airways sold their stakes to Naresh Goyal who then became the airline's sole shareholder. Jet Airways floated a minority stake of around 20% on the Mumbai stock exchange in 2005 to enable it to reduce the debts that had been accumulated since its inception as well as to fund its fleet expansion programme, including the acquisition of a fleet of new Airbus A330 and Boeing 777 long-haul widebodied jets to operate new long range services, primarily to Europe and North America. This resulted in a reduction of Tailwind's stake in the airline to just below 80%. According to the company's articles of association, the bulk of Naresh Goyal's shares in Tailwinds are held on behalf of several other individuals who all seem to be resident citizens of India. While Indian government officials have been satisfied that these arrangements do not compromise Jet Airways' status as an Indian-owned airline that is effectively controlled by Indian citizens, they were viewed as "problematic" by the American authorities.^[5]

Another issue that was "problematic" in the eyes of the US aviation authorities concerned the controversy surrounding Naresh Goyal's citizenship. There have been reports in the Indian media that he is an Indian-born, naturalised German citizen who is permanently resident in the UK. India's citizenship laws barring dual citizenship for Indian passport holders have recently been amended permitting Indian citizens to take up another country's citizenship - bar Pakistan and Bangladesh - without forfeiting their Indian citizenship as long as that country permits dual citizenship. This does not apply to Germany as it does not allow dual citizenship, unlike the UK, US, Canada, Australia and the Netherlands for instance, which do allow dual citizenship.

Had these media reports turned out to be true confirming that Jet Airways was effectively controlled by Naresh Goyal through his majority ownership of Tailwinds, the US authorities might have construed this as a violation of the "open skies" bilateral air services agreement between India and the US as well as international aviation law. Aviation law states that an airline must be substantially owned and controlled by citizens of the country where it is based in order to qualify as a "flag carrier" representing that country. This means that if Jet Airways were effectively controlled by a German rather than an Indian citizen, its traffic rights between India and the US and possibly other countries as well might need to be renegotiated under the German-US "open skies" bilateral aviation accord. In addition, the US and other countries could ask the Indian Government for further concessions for their own designated flag carriers providing scheduled air services to/from India if Jet Airways wanted to protect its international traffic rights from/to India. This, in turn, could lead the company's Indian-based competitors to complain to the Indian authorities that Jet Airways was not a "genuine" Indian flag carrier and might potentially result in competitors applying for the revocation of Jet Airways' operating permit and traffic rights (in India and abroad).

Rumours have circulated that Tailwinds acted as a front for foreign airlines or possibly even Dawood Ibrahim, India's most wanted criminal, as well as global terror organization al Qaeda.^[5] Since Dawood Ibrahim's name is on Interpol's most wanted list and has been declared a terrorist by the US government, the US authorities' review of Jet Airways' application for permission to commence regular commercial airline operations between India and the USA by being issued with a so-called "foreign [air] carrier permit" took more than two years coming. The US State Department now seems to be convinced that the ownership pattern of Jet Airways does not clash with national security.

The latest controversy arose when Asmin Tariq, a British-born contractor of Pakistani descent, who was working for the airline as a security agent at London Heathrow Airport (and was subsequently made a member of staff when the airline decided to bring its London-based security operation in-house) became implicated in the foiled terror plot of August 10, 2006 to blow up over several weeks up to ten transatlantic airliners belonging to three different US airlines in mid-air on their way from London-Heathrow/-Gatwick to New York JFK/Newark and Los Angeles/LAX airports.

[Asmin Tariq] has been arrested along with the other 20+ suspects and is now in British police custody. In addition, he has also been suspended from duty by Jet Airways. When asked how such a person could have been employed by the airline in a position demanding extreme confidence and trust, Jet Airways defended its conduct by saying that the person was a UK passport holder who had passed the stringent security requirements of BAA, Heathrow's owner and operator. They also said that under UK employment legislation the company was obliged to offer any permanent appointments to former contractors once the contract that formed the basis of their original employment had been terminated.

Of late Indian Minister of state for Civil Aviation Praful Patel is believed to have shown undue favouritism to Jet Airways by clearing files related to the Airlines at breakneck speed. Jet Airways's application to fly to Canada was cleared within two weeks of application being received by DGCA while blocking the entry of new entrants into Indian Aviation(scheduled operations)for over two years. A Parliamentry Committee headed by Nilotpal Basu found Minister Patel favouring Jet Airways but considering the fact that Minister Patel was an ex-director of the Board of Jet Airways, the fault lines lie with the Prime Minister who failed to see the possibility of vested interests taking over the Civil Aviation Ministry.

The Air Sahara deal

Failed merger

On January 2006 Jet Airways announced that it was to buy Air Sahara for $500 million in an all-cash deal. Everything, including Sahara's assets and infrastructure, would belong to Jet Airways. This deal would have been the biggest in India's aviation history and the resulting airline the country's largest, had it gone through.

Market reaction to the deal was mixed, with analysts suggesting that Jet Airways was paying too much for Air Sahara. The deadline for the deal to be completed was June 21 2006. Jet Airways claimed that a final sticking point was the government's delay in approving Jet chairman Naresh Goyal's appointment to the Air Sahara board. Air Sahara countered that Jet Airways had engineered this impasse by delaying the request for such approval, as a way of extricating themselves from a deal they now regretted. Jet was said to be willing to go ahead with the deal only if the originally agreed price was lowered by 20-25% on the basis of Air Sahara's mounting debts, an option which was firmly rejected by Air Sahara. Finally both sides confirmed that the deal was off.

Following the failure of the deals, the companies have filed lawsuits seeking damages from each other.

On 22 September 2006, the Bombay High Court allowed Jet Airways to withdraw Rs. 1,500 crore deposited by it for acquiring rival Air Sahara. "Jet will have the right to withdraw Rs. 1,500 crore against bank guarantee of the same amount," Justice D K Deshmukh said in his order. Jet Airways was to receive the amount in the escrow account, while the interest would go to Air Sahara. However, the escrow account formalities will be decided by an arbitration tribunal. Arbitration was to begin on 9 October 2006.

Successful buyout

On April 12 2007 Jet Airways agreed to buy out Air Sahara for 14.5 billion Rupees ($340 million). Air Sahara will be renamed Jet Lite, and will be marketed between low-cost carriers and full service airlines. With the acquisition of Air Sahara, Jet Airways is set to refurbish the fleet and crew with new livery and uniform. The deal will give the airline a combined domestic market share of about 32%. Jet's attempt to buy Air Sahara in 2006 collapsed, but the company has said the new deal has been reached amicably. Both airlines also plan to merge and restructure their international operations as well.

Jet Airways, founded by London-based former travel agent Naresh Goyal, controls about 24.5% of the Indian domestic aviation market. Air Sahara, owned by reclusive businessman Subroto Roy, controls about 7%.

Destinations

^{[citation needed]}

Jet Airways serves 59 destinations, including 14 cities outside India.^[6]

Jet Airways' 58 destinations include most of the big cities in India. International destinations include Dhaka, Kathmandu, Colombo, Singapore, Bangkok, Kuala Lumpur, Heathrow, Brussels, Newark, New York and Toronto, Kuwait and Bahrain Oman and Qatar. Jet Airways was the first private airline in India to fly to international destinations. It started international operations in March 2004 between Chennai and Colombo after it had been cleared by the Government of India to operate scheduled services to international destinations.

Subsequently, a second route linking Mumbai with Colombo and a new route between Delhi and Kathmandu were added. The latter commenced in May 2004. On December 29 2004 the Government of India decided in principle to permit privately owned Indian carriers to operate scheduled air services to any international destination world-wide with the exception of the Gulf countries, i.e., Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates as well as Pakistan. They will fly to the Middle East from Kochi, Thrivananthapuram, Kozhikode (Calicut), Mumbai and Delhi. Another effect of this stipulation was that, apart from Jet Airways itself, Air Sahara was the only other privately owned Indian carrier permitted to operate international scheduled services.

Jet Airways sought to take maximum advantage of this ruling by adding new international scheduled routes to destinations within the flying range of its growing fleet of "Next Generation" Boeing 737-700/800 series narrowbodied jets, such as Singapore and Kuala Lumpur. This first led to a decision to lease three Airbus A340-300E widebodies from South African Airways to enable it to commence non-stop flights to London Heathrow in the UK and to subsequently place a large order for a fleet of brand-new Airbus A330-200 and Boeing 777-300ER widebodied airliners to permit further expansion, especially to additional destinations in Europe and North America. In 2006 Jet Airways has international services to Kathmandu, Colombo, Singapore, Kuala Lumpur, London Heathrow, operating from Mumbai, Delhi, Chennai and Amritsar.

Jet Airways has begun thrice-weekly operations from the north Indian city of Amritsar to London Heathrow to serve the UK's large ethnic Punjabi community. Jet Airways began serving Amritsar on August 4 2006. This service, which was initially operated at a frequency of three flights a week, is now operated six times a week. Jet Airways has started flying daily flights to Bangkok from Delhi and Kolkata (formerly Calcutta) effective January 23 2007. Jet Airways has also started flights to Hyderabad, India from Mumbai more than two years back.

Jet Airways started three times-a-week service from Ahmedabad to London Heathrow on April 3, 2007 to cater to the travel requirements of the ethnic Gujarati community in the UK. The airline is using its recently delivered Airbus A330-200s on both the Amritsar and Ahmedabad services while "Next Generation" Boeing 737-800s equipped with winglets are used on all Bangkok sectors.

It also claimed that its international operations were profitable, with the sole exception of its long-haul flights between India and London-Heathrow.

On 5 September 2007 Jet Airways started to fly to Toronto via Brussels. On 28 October 2007 Jet Airways started flying to New York JFK via Brussels. Jet Airways is also considering starting flights to North America from Banglore, Hyderabad, Ahmedabad, Amritsar and Kolkata apart from Mumbai, Delhi and Chennai^{[citation needed]}. Jet is now flying to Gulf regions i.e. Bahrain, Oman

Meanwhile, Jet Airways is planning to set up a hub at Shanghai Pudong International Airport to serve transpacific routes to San Francisco, Vancouver and Los Angeles.^[7] Upon that, it plans to fly to Beijing, Guangzhou, Hong Kong and Macau.

Fleet

Jet Airways (India) Ltd. is an airline based in Mumbai, India, operating domestic and international services. It operates over 355 daily flights to 43 destinations across the country and 15 overseas. Its main base is Chhatrapati Shivaji International Airport in Mumbai. Jet Airways other major hubs are located at Indira Gandhi International Airport, Delhi, Anna International Airport, Chennai, Netaji Subhash Chandra Bose International Airport, Kolkata, Bangalore International Airport, Bangalore, and Brussels Airport, Brussels.^[1]

According to March 2007 available figures, its share of India's domestic aviation market increased to over 43% (up from less than 27% a few months prior to March 2007), and, as of 2007, is greater than any other Indian domestic operator's market share.^[8] Jet Airways was voted as the best airline in South Asia and Central Asia region by Skytrax in 2007.^[9]

History

Jet Airways was incorporated as an "air taxi" operator on 1 April 1992. It started commercial airline operations on 5 May 1993 with a fleet of 4 Boeing 737-300 aircraft. In January 1994 a change in the law enabled Jet Airways to apply for scheduled airline status, which was granted on 4 January 1995. It began international operations to Sri Lanka in March 2004. Plans to acquire rival Air Sahara, announced in January 2006, after some rough patches deal got through. The airline is owned by Tailwinds (owned by Naresh Goyal) (80%) and public shares (20%) and has 10,017 employees (at March 2007).^[1]

Naresh Goyal, who already owned Jetair (Private) Limited (which provided sales and marketing for foreign airlines in India) set up Jet Airways as a full-service scheduled airline that would give competition to state-owned Indian Airlines. Indian Airlines had enjoyed a monopoly in the domestic market between 1953, when all major Indian air transport providers were nationalised under the Air Corporations Act (1953), and January 1994, when the Air Corporations Act was repealed, following which Jet Airways received scheduled airline status. ^{[citation needed]}

Jet Airways and Air Sahara were the only private airlines to survive the Indian business downturn of the early 1990s. In January 2006, Jet Airways announced that it would buy Air Sahara making it the biggest takeover in Indian aviation history. The resulting airline would have been the country's largest^[10] but the deal fell through in June 2006. However, a modified deal went through in January 2007.