After several rounds of 'summit'' talks between the two aviation giants in the country, an announcement was made of forming an operational alliance that will command nearly 50 per cent market share of the domestic sky. The announcement could spell trouble for the low-fare model, according to sources. Both Jet and Kingfisher airlines are losing up to Rs 10 crore daily. The new deal, could allow them to cut losses by offering features like code-share agreements, especially on foreign routes.
Kingfisher airlines can now be expected to go slow on expanding its international operations.
The two airlines may also coordinate their flight schedule, passenger capacity to avoid competition in the domestic sectors, hiking fares and possibly share common ground handling at airports to cut the costs.
The media buzz helped push the airlines scrips up with Sensex closing 7.4 per cent higher. Kingfisher stock closed a whopping 32.35 per cent higher at Rs 51.35, while Jet, which touched its 52-week low of Rs 255 during intra-day trade today, closed 11.12 per cent higher at Rs 291.80.
Aviation minister Praful Patel has also been credited with bringing the two companies together to form brand GM (Goyal-Mallya) of Indian aviation sector.
Patel's replied was: ''I didn't get into this. I just cautioned the entire industry and did not ask any one in particular to shake hands. This (Jet-Kingfisher alliance) is born out of necessity and adversity. Airlines have to first be able to survive for a later-day fight (for market leadership).''