Jet Airways vows to cut costs in recovery plan

Indian carrier struggling in market where competition has driven fares so low that airlines can barely cover costs

Troubled carrier Jet Airways India Ltd said it will sell a stake in its loyalty programme and cut as much as Rs20 billion (Dh1.05 billion; $285 million) in costs over the next two years as part of a turnaround plan after years of losses in a competitive aviation market.

Announcing the biggest quarterly loss since 2015, the board of the Mumbai-based airline considered fundraising measures at a meeting to help revive the company, Jet Airways said in a filing to the stock exchange late Monday.

The management has been tasked to accomplish this in a “time-bound manner,” it said.

“The air passenger traffic is extremely strong but it’s now on the incumbents how they deal with the financial problems,” said Sanjiv Bhasin, executive vice-president at Mumbai-based IIFL Securities Ltd.

Shares rose 4.7 per cent to Rs295.45 in Mumbai yesterday.

Jet Airways is struggling in a market where intense competition has driven air fares so low that airlines can barely cover costs. Profitability for local airlines is unlikely to recover in the near term as carriers plan to add about 100 aircraft in the next five years, putting pressure on fares, Fitch Ratings said this month.

Market share halves

With the entry of low-cost operators such as IndiGo, run by InterGlobe Aviation Ltd, and SpiceJet Ltd, the market share of Jet Airways has more than halved in the past decade to about 15 per cent.

The Mumbai-based carrier has reported losses in all but two of the past 11 years, and this month said it needed to raise funds to meet liquidity requirements.

Among the proposed steps is the sale of its stake in JetPrivilege, its loyalty programme, which grew 30 per cent to 8 million customers in the year ended March 31.