‘Jet-Kingfisher tie-up could accelerate profitability’

October 14th, 2008 - 10:05 pm ICT by IANS  

New Delhi, Oct 14 (IANS) The alliance of leading air carriers Jet Airways and Kingfisher Airlines will significantly rationalise and reduce operational costs, and ensure adequate utilisation of assets, a leading rating company said here Tuesday.Credit Rating Information Services of India Ltd (Crisil) in a statement said the Jet-Kingfisher tie-up would usher in a new era of co-operation in the airline services industry.

“This alliance has come at a time of adversity. The two largest private players in the industry have formed an alliance, which would significantly rationalise and reduce their costs,” said Ajay D’Souza, head of Crisil Research.

He said the new alliance would improve load factors and increase aircraft utilisation for both airlines.

“They would now be able to jointly deploy 189 aircraft owned by them on domestic and international routes and cross sell flight inventories and have superior bargaining power with suppliers of fuel, aircraft, catering services, which would all lead to cost savings,” said D’Souza.

Also, measures like common ground handling, cross utilisation of flight crew and commonality of training of crew and other technical resources are expected to support operating margins of both carriers, he added.

“These extraordinary measures have been necessitated by the current economic environment and stressed financial position of the airlines,” Crisil said.

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