Jet Airways eyes competitors' assets

Jet Airways will be scouting for US-style takeovers when Indian carriers hit the airpocket. With several airline chiefs forecasting turbulent skies in the next couple of years, Jet Airways chief executive officer Wolfgang Prock-Schauer said the carrier would scout for opportunities to acquire airline assets if the fleets had logistics synergy.

The Indian aviation industry is set for consolidation within the next couple of years. That can happen in two ways: sale of airlines, lock stock and barrel; and sale of asset like aircraft, pilots and engineers. We will participate if there is an opportunity to pick up assets. That's how consolidation happens in the US, the Jet Airways chief said. Still smarting from the failed Air Sahara takeover bid, Wolfgang made it clear that Jet Airways would steer clear of picking up an airline. "Only if an airline sells its planes that match our fleet, comprising primarily Boeing 737-800 aircraft, then only we'll be interested," he said. Most carriers use the Airbus A-320.

The Jet Airways chief's sentiment on turbulence in the skies are in sync with what Air India chairman & MD V Thulasidas and Air Sahara president have forecast as well. Both had earlier said that a major shake-up was imminent. The mega-merger between Air India and Indian Airlines sometime next year could trigger the consolidation drive. "The Indian market is buoyant. But, it may not be able to absorb the huge capacity additions lined up by carriers, particularly those in the no-frills business," remarked Thulasidas. Sharma felt likewise. Churn is inevitable. There will be mergers and acquisitions, he said.

On Monday, Wolfgang said overcapacity in the market would force a consolidation. So many airlines cannot survive, he said, pointing to the slide in passenger loads and rise in operational losses. Against loads of 75% last November, the carrier are doing 65% now. Jet Airways hit the airpocket with a loss of Rs 100 crore in six months ended September 2006. Air Deccan fared worse, recording Rs 340 crore loss for 15 months ending June 2006. The airline is banking on cost-saving initiatives and expansion plan to emerge from the air-pocket. Rising fuel prices and employee costs have squeezed margins. "For the next five months, we have chalked out a $22-million savings plan and slashed the budgeted manpower hike by 600 persons. A fuel policy to optimise tankering and ATF prices re-negotiation with oil firms are in store. The measures should bring turn around in two years," he said.

On the expansion front, the airline is set to increase the fleet size by 10% each year. "We have conservative growth estimates. There are already 200 aircraft in India. The market can absorb a 25% capacity hike," he said. That would mean bulk cancellation of aircraft orders. In the last couple of years, Indian carriers have ordered more than 400 aircraft!

visit us @ http://www.silkrouteholidays.com