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Thu 16 Oct 2008 06:26 AM

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Gulf expansion plans in doubt as airline cuts 1,900 jobs

India's Jet Airways announces cutbacks just weeks after Gulf growth proposals.

India's largest private-sector carrier Jet Airways, which revealed major expansion plans for Gulf routes only last month, is laying off 1,900 employees because of the economic slowdown and soaring costs.

The move comes just two days after the firm entered into a working alliance with its main rival, Kingfisher Airlines, to battle slowing growth and high fuel prices.

And it comes just weeks after the airline launched daily services from Dubai to both Mumbai and New Delhi.

Chairman Naresh Goyal in September revealed there were plans to up the Mumbai operation to double daily while flights from the emirate to Chennai, Hyderabad, Cochi, Calicut, Trivandrum and possibly Bangalore, were on the cards if approval was granted by the UAE and Indian governments.

Goyal also said Jet Airways' subsidiary low-fares airline, JetLite, would look to serve key destinations in the Gulf, particularly Dubai.

It is not clear what impact the cutbacks will have on these expansion plans.

"Due to recent fuel prices and the downturn in traffic, Jet Airways' long-haul expansion had to be pruned down," said chief executive Wolfgang Prock Schauer.

"In these difficult times, the number of flights Jet Airways will be offering in (the) winter schedule will be approximately 15 percent lower than originally planned," he said in a statement.

"As a first step, around 800 flight attendants, recently recruited for the planned expansion programme - which has now been suspended - have been released," Schauer said.

"In all, a total of 1,900 employees would lose their jobs, and this is across all levels," Saroj Dutta, executive director of Jet Airways added.

This is the sharpest number of job cuts announced by the private airline since its inception in 1992.

Jet officials said that these employees may be recalled if the economic scenario improves over time. Dutta said this timeframe could range anywhere between four months to two years.

Combined losses for India's airlines are estimated at $2 billion for the year to March, industry data showed.

The sector has seen consolidation in the past 12 months through a Deccan-Kingfisher merger in December last year, the state-run Air India and Indian combine and the Jet buyout of loss-making Air Sahara.

The Jet-Kingfisher alliance involves joint fuel management, ground handling, network rationalisation and crew sharing. The two firms have a combined 60 percent share of the Indian market.

The tie-up could save the firms as much as 15 billion rupees ($312 million), the Press Trust of India agency said, quoting officials at India's first civil aviation airshow in the southern city of Hyderabad.

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