Jet Sahara merger elevates passenger expectations

The deal between Jet Airways and Air Sahara is finally through. While competition in the aviation industry increases, passengers say quality would be the key and they expect better service at a lower rate post the biggest airline merger in India.

Pritha Roy Choudhury

WITH THE FINAL sealing of the Jet-Sahara deal, Jet is all set to acquire the shares of Sahara Airlines at a price of Rs 1450 Crore. This is second anticipated market driven coalition in the aviation industry after the government has already set the ball rolling with the merger of two state owned airlines Indian and Air-India.

Jet Airways-Air Sahara and Indian-Air India combine would now command over 50 per cent share of the total market and nearly 70 percent of the total capacity. This shows that there would now be a clear division between full service carriers and low-cost airlines. Jet Airways-Air Sahara and Indian-Air India would together have over 90 per cent of the domestic full service market.

Delighted on the merger, a beaming, A K Shivanandan, Senior General Manager, Corporate Communication, Jet Airways, said they are looking forward enhancing passenger benefits. “We will upgrade our facilities and provide the maximum benefits to our passengers. We are sure the passengers will be very happy and with our service and look forward to using our airline again and again,” said Shivanandan.

Air Sahara, whose parent Sahara Group had decided to exit the aviation business, had earlier been courted by Kingfisher Airlines but a deal could not materialize due to differences over valuation.

Speaking exclusively to merinews, an official of Kingfisher, who preferred not to be identified said that the merger will not affect Kingfisher in anyway as it is already witnessing a steady and positive growth. “Size of Jet Airways is going to increase but in no way will the merger have any impact on Kingfisher. Kingfisher has grown to great heights. If you see the market share of Jet, it has decreased by 9.7 per cent in the past two months. But if you see the market share of Kingfisher it is showing a steady and positive growth,” said the official of Kingfisher.

With a dominant player gone, price increases could become easier. All this makes a competition authority a must, to protect the consumers’ interests in the rapidly changing aviation market.

Again a common maintenance base and route rationalization could cut down operational costs for Jet. Adding to the fact that Jet will have more craft in its fleet while its rivals will have to wait at least 3-4 years before the aircrafts they have ordered, are delivered.

Frequent fliers feel they stand to gain in the current scenario.

“Jet Airways has been the pioneer in providing quality service to air passengers. And now we expect better quality service at a much lesser rate. The reason being, while the capital expenditure and the operational expenditure is going to be reduced with the acquisition, the frequent flier would expect rates to come down comparatively with quality service,” said R Jai Krishna.

Jet has already paid Rs 500 crore as advance in lieu of the shares pledged by Sahara last year. An amount of Rs 600 crore is expected to be adjusted as arrears, interest and other liabilities. Jet will pay Rs 400 crore by April 20 and the balance of Rs 550 crore is payable in four interest free annual equal installments commencing on or before March 30, 2008.

Jet will enjoy the rights on brand Air Sahara for first six months after which it would be returned to Sahara group. After exiting the airline services, Air Sahara would operate helicopter services under its own ‘Air Sahara’ brand.