Jet Airways’ overseas rights to be allotted to other carriers

  • May 16, 2019
  • The Financial Express

Jet Airways is now close to losing its international flying rights as the ministry of civil aviation is set to allot its overseas routes to other carriers.

According to a senior government official, all major scheduled airlines, except AirAsia India, have requested the ministry to allot the international routes among them so that the capacity lying idle since April 17 can be utilised.

AirAsia, a joint venture between Tata Sons and Malaysia-based AirAsia Berhad, is yet to receive a nod to fly overseas, therefore, it is not part of this airline grouping.

Bilateral flying rights are an agreement between two countries that allow the airlines of the respective countries to operate services with a specific number of seats.

Market leader IndiGo, SpiceJet, GoAir, Air India and Vistara are the eligible Indian carriers to take up Jet’s overseas rights as they ramp up their international operations across routes. So far, only national carrier Air India has been awarded rights over foreign routes from Jet’s quota, the official said.

Jet was the largest scheduled operator in India accounting for 13.8% market share in international operations during FY18. The Mumbai-based carrier had rights to ferry over 24,000 passengers each week to/from Dubai and Abu Dhabi in the UAE, while it could operate 11,000 seats per week to Singapore.

Its flying quota to Thailand, Qatar and Hong Kong stood at 10,000, 8,500 and 3,600 seats per week, respectively, before it suspended all operations on April 17 owing to severe financial crunch.

The government is likely to finalise the criteria for awarding these unutilised rights to other airlines. It awarded domestic airport slots on the basis of new aircraft inducted by the airlines. These overseas flying rights are likely to be awarded for an interim period and Jet can reclaim them if it manages to fly again.

The Jet management and one of its employees’ union had written to the government last month to wait for the outcome of the airline’s sale process being carried out by its lenders. Banks have not been able to finalise suitors to pick up stake in Jet as only Etihad Airways, Jet’s minority equity partner, has come forward to reinvest in the beleaguered carrier but that too with conditions. The lenders are reportedly in talks with India’s sovereign wealth fund NIIF and other unsolicited bidders to bail out Jet.

According to analysts, overseas expansion is likely to improve passenger yields at low-cost carriers.

“Its (Jet’s) capacity share among Indian carriers (domestic plus international) was 23% due to a 34% share in the international market. Therefore the void created by the removal of Jet Airways capacity should lead to slower capacity growth in FY20E, and help domestic yields to strengthen 4-5% YoY in FY20E and remain high in the near term,” analysts at UBS Securities India had noted.

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