Air France-KLM to deepen ties with Jet Airways

Jet Airways is going to deepen its commercial partnership with Air France-KLM on the India-Europe routes. The airlines have aligned with corporate contracts and have started a discussion to have a common policy for travel agents.

“Locally, we have aligned with the corporate contract policy. From beginning of this month, the local corporate contracts have been aligned with Jet Airways,” said Jean-Noel Rault, general manager (Indian subcontinent) of Air France-KLM. Alignment with corporate contracts means the airlines will offer similar offers, incentives, and discounts to its corporate clients. The two firms have also started in-principle discussion on a common trade policy, which would give them permission to align with their incentives and agreements with travel agents.

“The alignment of corporate policy has been a quick move in a partnership. If you do a comparison, the Air France-KLM-Delta transatlantic joint venture (JV) is at least 10 years old. So, it is not like that you do it in 10 months to develop a tie-up like revenue sharing. We are moving relatively fast with Jet Airways, compared to other partnership,” said KLM Chief Executive Officer Pieter Elbers.

Deep commercial integration between airlines is becoming increasingly popular around the world. According to a study by aviation consultancy firm CAPA, 35 per cent of all global long-haul traffic could be part of an immunised JV by 2021. With transatlantic markets largely mature, this substantial growth is likely to come from increased tie-ups between developed and developing markets.

Last year, Jet and Air FranceKLM signed an enhanced cooperation agreement for the development of their operations between Europe and India. The deal is modelled on the principle of metal neutrality where revenue or profit is shared on a predetermined basis on select routes and it does not matter which airline flies a passenger.

Elbers said the agreement had allowed KLM to increase its footprint in the Indian market. “From the experience that we had in the US, China, and Brazil, we see that the best proposition was given to customers when we had a strong local partner. With that vision, we started engaging with Jet. Then they moved their European gateway to Amsterdam followed by the enhance revenue cooperation agreement. It brought a lot of connection, like we got a lot of feedback from the secondary Indian cities,” Elbers said.

Currently, the three airlines in total have 65 flights operating in India, Amsterdam, and Paris.

Jet operates 21 flights to KLM’s hub at Schiphol Airport in Amsterdam in addition to the 11 flights of KLM from India. At Paris, there are 21 flights from Air France and another 12 flights from Jet.

Elbers said there had been a double-digit growth in passenger numbers on each other's network.

“At Amsterdam, on a daily basis, we have 350 passengers coming from the network of Jet Airways. It is a meaningful number. Due to this, we have found that the Indian travellers on the European routes are starting to discover us again. Our position as Air France-KLM was not the strongest in the Indian market. With this enhanced deal, it has improved significantly,” he said.

The two airlines have also tied up in terms of cargo revenue sharing. “We are translating the agreements into action,” he said.