The Telegraph
Since 1st March, 1999
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Jet open to tie-ups with Air India

New Delhi, Sept. 4: Jet Airways wants to “cooperate” with Air India to capture a larger share of the international market.

Jet chairman Naresh Goyal told reporters today he was looking for tie-ups in the areas of ground handling and catering.

“If we join hands with the newly formed Air India, we can definitely get a 50 per cent market share,” he said in the presence of civil aviation minister Praful Patel, who did not comment.

Goyal said, “We would co-operate with Air India, like Air France, Lufthansa and other carriers co-operate on the technical side — ground handling, maintenance, catering, everything. That’s how the health of airlines will improve because most of them make money from these services, not from operations.”

However, Air India sources said the state-run airline was planning to shortly join Star Alliance, which has 17 member airlines.

Star Alliance was formed in 1997 and operates one of the best known frequent flyer programmes in aviation. Two Chinese airlines — Air China and Shanghai Airlines — are due to join in December. Turkish Airlines will join next year.

Sources said the Star Alliance has very strict rules barring members cooperating with non-alliance members in business areas.

The Jet chief, who announced the launch of his carrier’s five-flights-a-week service to Toronto via Brussels from Wednesday, said Brussels would be the hub for his carrier in Europe.

Eventually, Jet proposes to serve at least 50 destinations either on its own or through partnerships with other carriers.

Rights offer delayed

Jet said it had decided to delay the proposed $400-million rights issue which was blamed on the weakness in the markets precipitated by the sub-prime mortgage crisis in the US.

“The company has decided to postpone raising $400 million for the time being... The plan has been deferred by two to three months,” Goyal said.

He said over the past few days, markets were not doing well, following the US subprime crisis. Even interest rates were very high, he added.

Goyal, who controls 78.5 per cent stake in the airline through promoter group firms, maintained that he would continue to remain the major shareholder.

Jet Airways had earlier planned to raise $400 million through a rights issue to shareholders in October.

Gulf flights

Goyal said Jet had applied to the civil aviation ministry to fly to Dubai, Muscat and Abu Dhabi from January.

The government hasn’t yet taken a decision on allowing private airlines to fly to the Gulf.

The sector has till now been reserved for the state-run airlines as compensation for undertaking humanitarian operations such as the evacuation of Indians from war-hit zones and calamity-struck areas

Goyal said his airline planned to fly to San Francisco, New York and Vancouver in the next few months.

Talking about his other company Jetlite, which came into existence after the merger of Air Sahara with Jet, Goyal said, “We have already recovered 50 per cent of the losses and we expect to break even by the end of the current fiscal.”

He also said by the end of this calendar year, the company would announce the time when it would be starting its cargo airline.

Although the Jet chief spoke of cooperation with Air India, business realities are likely to force his airline to turn into a major competitor. Besides fighting for market share on the India-UK route and a plan to eat into AI-IA’s Gulf market, Jet Airways is believed to have an India-to-San Francisco service on its agenda.

On Monday, Air India announced that it would launch a non-stop service from Bangalore to San Francisco in 2008. The route will connect two of the world’s leading IT centres.

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