Jet Airways procured ten ultra-luxuriously appointed Boeing 777-300ERs for its ambitious international expansion. It even won awards for its international first class, featuring private suites.

Now those plans are in tatters, and Jet has abandoned its international ambitions, at least for the foreseeable future. Recently TravelBizMonitor reported

Jet Airways, has dropped its expansion plan, especially plans of expanding overseas informed a top official source of the airline. “We have dropped plans for overseas expansion for the time being. Now our focus will be on consolidation. In the domestic markets also, we are reducing capacity. We are also going slow on the acquisition of new aircraft,” said the source. As part of their cost-cutting plan, Jet Airways may also resort to leasing out their fleet.

Jet Airways/Turkish THY/Gulf Air
Boeing 777-300ER seat map.
The "may lease out its fleet" is already an "is leasing out its fleet". Turkish Airlines THY is already reaping the benefit of the three 777s it has leased from Jet. THY has been enjoying unprecedented success with its 777, and a possible fourth Jet 777 is rumoured expected to join THY soon.

Now, Business Traveller and Air Transport Intelligence are reporting, Bahrain based, Gulf Air is expected to lease four Jet Airways Boeing 777-300ERs, which it will introduce on routes including London Heathrow from March.

Gulf Air chief executive Bjorn Naf has said the carrier would take all four 312-seat 777s this year, and lease them for around three years. While Naf declined to identify the source of the aircraft, it is certainly Jet Airways. Gulf Air has already leased two Airbus A330s from Jet Airways, which has also been actively seeking to lease out its 777-300ERs to generate desperately needed cash.

The 777s would potentially serve as a replacement for a few of Gulf Air's current A340-300s.

It is unclear whether the aircraft will be "wet leased" i.e. along with the crew, as in the case of Turkish THY, or a "dry" aircraft only lease.

Jet Airways has seven Boeing 777-300ERs and nine Airbus A330-200s left in its fleet after the first round of leases to Gulf and THY. After this Gulf Air deal, it will have only three 777s left in its fleet. That will surely require some more route and capacity rationalisation by Jet on its existing international operations. Talks with Oman Air for lease of Jet Airways aircraft, are also expected to fructify very soon, and passengers in India can expect to bid adieu to Jet Airways from the international skies.

In a repeat of THY, Gulf Air’s premium passengers are in for a treat, as Jet’s product includes fully flat beds in business class and private suites in first. (View a photo gallery of the premium classes)

After years of watching its rivals Emirates, Etihad and Qatar, expand their fleets with superior cabin aircraft, which forced a further contraction at Gulf Air, the airline will now be able to mount a serious challenge.

In addition to the Bahrain - London Heathrow route, Gulf Air is considering using the 777s on Bahrain - Bangkok and Bahrain - Kuala Lumpur routes. The 777s will also afford Gulf Air the possibility of serving the US east coast.

Incidentally, today is Makar Sankranti, a festival that signifies the beginning of the harvest season for the farmers of Indian Sub-Continent, and the only Hindu festival celebrated by the solar calendar. All other festivals are by the lunar calendar. Happy Sankranti to all Bangalore Aviation readers.

As I indicated in my previous article, there are strong rumours of a "merger" or "tie-up" between Australian carrier Qantas and Malaysian Airlines (MAS). Given the regulatory stranglehold and national politics involved in Asia, a full merger is next to impossible.

Not only do I feel that this tie-up will happen, I strongly believe that it will result in positive results for all the players, not just the airlines.

The future for Qantas is Asia, but either due to a difference in business culture, or national ego, or economic and/or market positions, Qantas really has no serious potential partners in Asia, other than Malaysian. A tie-up with either Singapore Airlines or Cathay Pacific or Japan Airlines and can be written off due to culture or ego reasons. Garuda, Thai, Philippines, Eva, China Air, Air China, or any of the Taiwanese or Chinese airlines are too small or do not offer adequate economic benefits to Qantas.

Qantas CEO, Alan Joyce, had said that Qantas was looking to be the senior partner in any merger or similar relationship that the carrier entered into. The recent failure of the merger talks with British Airways highlights Joyce's desires.

Under the able stewardship of Idris Jala, Malaysian has staged a phenomenal comeback. After years of losses, government intervention and its resultant inefficiencies, Jala has moved MAS in to profitability, for the last 3 years. Even until the third quarter of 2008, despite the economic crises, he has delivered profits. Driven by its formidable low cost carrier (LCC) competitor AirAsia, and Jala, MAS has undertaken ruthless cost cutting and route rationalisation. Despite this, Jala recognises, MAS will never meet the cost base of AirAsia, and has moved the airline up the value chain, focusing on the higher end of the market, instead.

Financially, Qantas has been in good profit for many years, thanks to the "Kangaroo Run", and has a decent cash balance sitting ready, should a deal with MAS come about.


At the same time, liberalisation is spreading through the region, may be in fits and starts. On December 1, the 70 year old duopoly of Malaysian Airlines and Singapore Airlines on the lucrative Singapore-Kuala Lumpur sector was opened up, after 5 years of lobbying by the LCCs of both countries, but Malaysia predominantly. Capacity has trebled virtually instantly.

Kuala Lumpur International Airport (KLIA) has much to offer. The airport was built and promoted by former Malaysian Prime Minister Dr. Mahathir Mohammed, as a competitor to Singapore's famous Changi Airport, a base for many international airlines, including Qantas.

Despite trying as hard as they could, KLIA could never match the economies of scale, and frequencies of Changi, which brought in increasing numbers of passengers. For many years, KLIA lagged, almost becoming a colossal white elephant. The poor situation at KLIA was further aggravated by its own government. For years, Malaysia resisted liberalisation of the KL-Singapore route. Apart from being one of Malaysian Airlines' most profitable routes, there was a constant fear of the undermining of KLIA as a hub, since Changi is easily the more preferred hub by both airlines and passengers.

Thanks to the fast growing AirAsia, KLIA is now making a comeback, as a low cost hub, but we should keep in mind, the airport still has high end facilities as well. KLIA is also a spacious airport, and with its planned expansion, will offer considerable growth opportunities to any global scale airline.

This low cost positioning is important. While Qantas withdrew from KLIA, due to low yields, and preferring to build economies of scale at Singapore, it has two low cost subsidiaries JetStar and Singapore based JetStar Asia. Jetstar Asia already flies to KLIA, and Jetstar used to fly the Sydney-KL route, but has withdrawn temporarily during the economic slow down.

Jetstar Asia has only a narrow body fleet, but is already reaping benefits from the recent KL-Singapore route liberalisation. Jetstar has a fleet of six Airbus A330's, two of which fly Australia to Japan (service due to terminate in December 2008), and can easily use KLIA as a base to expand the Qantas brand in to India, south-east Asia, the middle east, Europe, and especially the United Kingdom, in response to the challenges of the ever busy AirAsia who is making KLIA as a low cost hub for Australians, with its upcoming UK service. Once Jetstar receives its Boeing 787 Dreamliners, hopefully in 2010, the KLIA base will blossom as an alternate "Kangaroo run" route.

A well established base in the backyard of arch-rival Singapore Airlines, while still maintaining its presence at Changi will suit the Qantas/Jetstar group just nicely, affording them and potential partner, Malaysian Airlines, more options, with Qantas still maintaining presence at Changi.

Unlike the talks with British Airways, in case of Malaysian Airlines, the Malaysian government are serious and any deal will have their blessing. So it will behoove Qantas to proceed. In the near future, Qantas and Malaysian can extend their Oneworld alliance membership further with code sharing and various joint strategies. In the medium term, to overcome the restrictive regulatory framework in South-East Asia, I expect that Qantas and Malaysian Airlines will have to enter in to some time of cross-holding and also for Qantas buy a significant minority share in Malaysian.

A deal, if consummated, with help re-define the south-east Asian skies, and benefit not just the airlines, but also KLIA.

AirAsia, a low-cost carrier from Malayasia, has announced that it will commence its daily direct flight to Tiruchirappalli, India from Kuala Lumpur, Malaysia beginning 1st December 2008. Employing a brand new fleet of Airbus A320, Tiruchirappalli will be the first route to be launched by AirAsia in India.

To celebrate the launch of this new service, AirAsia is offering an unbeatable low fare starting from Rs. 699* (RM49*) one-way. This offer is available online exclusively at AirAsia’s website, www.airasia.com for the booking period from 30 October, 2008 – 9 November, 2008, for travel anytime between December 1, 2008 – July 31, 2009.

With AirAsia offering an extensive route network encompassing over 108 routes in Asia, including the ones served by AirAsia X, its long-haul affiliate to Gold Coast, Perth, Melbourne, Australia and Hangzhou, China, it is now more convenient than ever to fly to Kuala Lumpur from Tiruchirappalli in the South Indian State of Tamil Nadu. Moreover as compared to other budget carriers, the route network offered by this award-winning airline is the most extensive in the region. This will translate into a low-cost yet efficient travel experience for customers who would benefit from using the LCC Terminal in Kuala Lumpur to connect to other regional ASEAN cities or long haul sectors serviced by AirAsia X.

Dato’ Sri Tony Fernandes, Group CEO of AirAsia Berhad commented “AirAsia’s low-cost model, with its ultra low fares and modern fleet of comfortable and spacious aircraft, is undoubtedly an attractive consumer proposition, strong enough to compete with premium airlines. Besides features such as our brand new modern fleet fitted with leather seats and spacious cabin, a variety of hot delicious meals, simple, no-frills but convenient and renowned customer service, friendly cabin crew, largest number of destinations serviced along with the highest flight frequencies and an unrivalled On Time Guarantee, establish AirAsia’s position as the best low-fare airline when it comes to offering customers the absolutely best-in-class travel value”

He also informed that “we (Air Asia) are looking into other locations in India within the next one-and-a-half years. These include Chennai, Cochin, Kolkata, Bangalore and Hyderabad for AirAsia while for AirAsia X, we are looking at New Delhi, and Mumbai.”

* All fares quoted are excluding airport taxes, fuel surcharges and fees, and are applicable for one-way travel only.