Jet Airways request slots at Amsterdam for Winter 2013 season; no flights to Newark

by Vinay Bhaskara

As Bangalore Aviation reported last month, Indian full service carrier Jet Airways is likely to move its long standing trans-Atlantic scissors hub to Amsterdam in conjunction with its new part-owner Etihad Airways. Late last week, Jet applied for the following slots at Amsterdam for the IATA Winter 2013/14 season.

9W 224 - DEL - AMS --> arr: 09.40 333 daily

9W 224 - AMS - YYZ --> dep: 12.10 333 daily

9W 223 - YYZ - AMS --> arr: 09.40 333 daily 

9W 223 -  AMS - DEL --> dep: 12.10 333 daily

9W 231 - BOM - AMS --> arr: 09.40 333 daily

9W 232 - AMS - BOM --> dep: 12.10 333 daily

Interestingly, Jet Airways has not requested slots between Amsterdam and Newark. Currently, Mumbai-Brussels-Newark is the best performing of Jet Airways' North American routes, and it is surprising that Jet Airways has not requested slots for Amsterdam-Newark, though the route is already served by both United Airlines and Delta Air Lines.

Of course, Jet Airways could be moving towards participation in the trans-Atlantic joint venture partnership with Delta, KLM, Air France, and Alitalia. This partnership allows member airlines to proportionally share costs and revenues, jointly discuss strategy, and generally act as one airline across the Atlantic.

Delta's existing flight 35 between Amsterdam and Newark departs at 12:50 pm daily (the return arrives into Amsterdam at 7:35 am) and is locked into that time by slot constraints at Newark Airport. However, this timing fits perfectly with the slots Jet has requested at Amsterdam and would allow for an effective scissors hub while only allocating three aircraft (one each for DEL-AMS-YYZ, YYZ-AMS-DEL, BOM-AMS-BOM) as opposed to the current four, freeing up one aircraft for use by Etihad. On Delta's end, their existing Amsterdam-Mumbai service could be passed off 

However, it also brings up the question of what will happen to Jet Airway's current slots in Newark. They can be potentially used by Etihad to launch Newark services; in fact a Mumbai-Abu Dhabi-Newark routing utilizing a Jet 777-300ER would be highly effective and help boost Etihad's connectivity whilst also ensuring Newark access on Jet Airways metal. 

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Jet Airways in talks with Air France-KLM, Delta, and Alitalia. To finally join SkyTeam?

Both Bloomberg and The Wall Street Journal are reporting that India's largest carrier Jet Airways is in talks with Air France-KLM, Alitalia and Delta Air Lines Inc. about joining the SkyTeam alliance.

Jet has long practised a policy of bi-lateral and code-share agreements and officially, its management has steadfastly refuted any speculation of carrier joining an alliance, but with Air India finally clearing its hurdles to enter the Star Alliance, and Kingfisher Airlines making progress as a member-elect of oneworld, Jet may not be able resist any longer. A source at Jet Airways said joining an alliance was now "inevitable".

Skyteam will be a good fit for Jet Airways. The Mumbai based carrier already flies to New York JFK, and Milan, major hubs for existing SkyTeam members Delta and Alitalia, in addition to Newark and twice daily to London Heathrow.

How Jet's international expansion fits with SkyTeam. Click on image for a larger view.

With Alitalia, Jet has also forged code-share agreements for onward connections to Europe. Its 2011 expansion includes Seoul Incheon, Amsterdam, and Rome again hubs for Korean Air Lines, KLM, and Alitalia.

While it has been denied permission, for now, by the Indian government to fly to Paris, the hub for Air France, industry insiders know that Jet will obtain the Paris permission soon enough.

Unlike Kingfisher which is a weak entrant and is being forced to compromise in return for entry in to oneworld, Jet will be in a strong negotiating position with SkyTeam. Jet offers a formidable pan-India network in both the full service and low cost segments, and more importantly, Jet fills a crucial void current missing in the Skyteam network, with its good network from the middle east to south-east Asia, which will also connect to existing SkyTeam members like China Southern and Vietnam Airlines and with Garuda Indonesia when it joins the alliance.

A possible demonstration of this strong position can be obtain from Dutch news site luchtvaartnieuws, which is reporting that Jet will move its Brussels hub to Amsterdam and take over one India USA route from KLM.

I have been long espousing that Jet should join SkyTeam sooner rather than later. Do you agree or disagree with my views? Please post a comment. Let's have a discussion.

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Air France-KLM edges out Lufthansa to buy 25% stake in Alitalia

Air France-KLM Group, the world's second largest airline, has agreed to pay 323 million euro ($432 million) for a 25 per cent stake of Alitalia SpA.

Alitalia was put into bankruptcy on August 29, after two years of attempts to sell the 49.9 percent state owned airline. On December 12, CAI agreed to buy Alitalia’s main assets and to combine it with smaller rival Air One SpA before bringing in a foreign airline as a minority investor.

From tomorrow, Alitalia will operate as a new company. Air France-KLM will get three out of 19 seats on Alitalia’s board and two out of nine on the executive committee.

The tie-up is expected to deliver 720 million euro in savings and additional revenue over three years.

The press release from Air France-KLM

AIR FRANCE KLM reinforces its co-operation with Alitalia

Air France-KLM and Alitalia have reached an agreement to strengthen their partnership cemented by Air France-KLM taking a minority stake in Alitalia. This agreement will give Air France-KLM greater access to the Italian market thanks to Alitalia which, following its acquisition of Air One, has reinforced its position on the domestic market. It also links Alitalia to the world’s leading air transport group, thereby offering its passengers access to the most powerful network linking Europe to the rest of the world, henceforth organised around a unique combination of hubs from North to Southern Europe.

Jean-Cyril Spinetta, Chairman and Pierre-Henri Gourgeon, Chief Executive Officer of Air France-KLM stated “In view of the numerous challenges facing our sector, cooperation between airlines is becoming increasingly necessary, and this partnership represents an important milestone. We are happy with this reinforced partnership with Alitalia, which represents a compelling development opportunity for both our companies, and is in the interest of our shareholders, our customers and our employees”.

Terms of the operation

Air France-KLM will subscribe to a reserved capital increase for an amount of some 323 million euros. As a result of this operation, Air France-KLM will own 25% of the capital of Alitalia. Alitalia’s other main industrial and financial shareholders include the Riva Group, IMSSI, Banca Intesa and the Benetton group.

A lock-up agreement will be implemented for a period of 4 years up to 12 January 2013., During this time, no Italian shareholder will be able to transfer shares externally to the Alitalia shareholder group or to Air France-KLM. During the fifth year – between 13 January and 28 October 2013 – the transfer of shares to third parties will be possible, but only on condition that the other shareholders have not exercised their pre-emption rights and that the transfer is approved by Board of Directors of Alitalia. The lock-up will cease to apply only in the case of a stock market quotation starting as of the third year.

Air France-KLM’s holding in Alitalia will be accounted under the equity method.

Synergies

Air France-KLM and Alitalia have estimated a level of potential synergies which will feed through progressively. They should derive mainly from the optimization of the networks and revenue management as well as the extension of the JV between Air France and Alitalia and the implementation of a JV between Alitalia and KLM. These JVs will cover all traffic between the three countries.

For Air France-KLM, these synergies are estimated at around 90 million euros per annum by Year 2 or 3 at the EBIT level. Alitalia will generate total synergies of around 280 million euros per annum by Year 2 or 3 on its side, of which Air France-KLM will consolidate 25% by the equity method.

The operation will be earnings accretive for Air France-KLM as early as Year 2. Return on Equity on Air France-KLM’s investment will be in the region of 15% as of Year 3, excluding the positive impact of its own synergies.

Governance

Air France-KLM will be represented on the Alitalia Board by three members out of a total of 19 and on the Executive Committee of the Board by two members out of a total of nine. Elsewhere, a Partnership Manager responsible for implementing the partnership strategy and overseeing the generation of synergies will be appointed for a term of three years, renewable once, and will be appointed on a rotating basis by the two groups. The first such Partnership Manager will be designated by Air France-KLM.

Suspensive conditions

The implementation of this agreement is subject, amongst others, to the approval of the various competition authorities, including the EU, which could be forthcoming before the end of the first quarter of 2009.

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