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Wed 29 Nov 2017 12:22 PM

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Air France-KLM extends India reach with Jet Airways revenue pact

Etihad will stay invested and the Indian company has no plan to sell more stakes to any other airline

Air France-KLM extends India reach with Jet Airways revenue pact
Jean-Marc Janaillac (2L), Chief Executive Officer of Air France-KLM shakes hands with Naresh Goyal (2R), founder Chairman of Jet Airways, after signing an agreement during a press conference in Mumbai on November 29, 2017. Air France-KLM and Jet Airways - India's leading airline, signed a cooperation agreement for the development of their operations between Europe and India.

Air France-KLM Group and Jet Airways India agreed to deepen an existing partnership with offerings on India-Europe routes together, giving the biggest European airline more seamless access to the world’s fastest growing major aviation market.

The latest deal will offer travel options for 44 cities in India and 106 destinations across Europe, Jean-Marc Janaillac, chairman of Air France-KLM said in a statement.

In addition, another partnership between the European group and Delta Air Lines will help connect India to a trans-Atlantic network with hubs in Amsterdam and Paris.

Jet Airways passengers will be able to book a single ticket for a trip to the US and Europe, and fly Delta, Air France-KLM or Virgin Atlantic for different legs of the journey, under the agreement. Flights will be “metal neutral,” meaning revenue will be shared regardless of whose aircraft is deployed.

The enhanced tie-up with Jet Airways, 24 percent owned by Abu Dhabi’s Etihad Airways, brings the European carrier closer to a market where passenger traffic is growing at more than 20 percent every year.

Air France-KLM has significantly strengthened its links with other major carriers in recent months, with an agreement in July to buy 31 percent of Britain’s Virgin Atlantic Airways while selling 10 percent stakes to SkyTeam alliance partners Delta Air Lines and China Eastern Airlines.

Fading Fortunes

Etihad will stay invested and the Indian company has no plan to sell more stakes to any other airline, Jet Airways chairman Naresh Goyal told reporters in Mumbai. The latest deal will help the airline boost revenue by $1 billion, he said without elaborating.

Jet Airways and state-owned Air India Ltd. are among carriers whose fortunes have ebbed over the years after Gulf operators like Emirates, Etihad and Qatar Airways started offering cheap fares to fly passengers to their hubs in Dubai, Abu Dhabi and Doha, before transferring them to other flights.

On local routes, no-frills carriers like market leader IndiGo, operated by InterGlobe Aviation, and SpiceJet have captured market share with on-time services and cheap fares.

Jet Airways, which was the first local airline to get investment from a foreign carrier, posted its first annual profit in seven years in the 12 months ended March 2016, mainly because of a drop in oil prices.

Etihad’s other investments have done even worse. Three of its former units - Italy’s Alitalia, Air Berlin and Swiss regional carrier Darwin Airline - all collapsed in 2017.

The Indian carrier, which is not part of any airline alliance, is in talks with Air France-KLM, Delta and Virgin Atlantic for joint fuel purchases as well as to collaborate on engineering and maintenance, Goyal said.

Jet Airways will connect Mumbai, New Delhi, Bengaluru and Chennai to the networks of Air France and Delta in Europe, CEO Vinay Dube said.

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