As Competition Commision clears Jet-Etihad merger, it is goodbye Jet and hello Jetihad

by Devesh Agarwal

On Tuesday, beleaguered Indian carrier, Jet Airways cleared its final hurdle in its $397 million quest to sell a 24% stake to Abu Dhabi based Etihad Airways PJSC, when the Competition Commission of India (CCI), cleared the deal paving the way for the Naresh Goyal promoted Jet to receive desperately needed cash from the deal.

The Union cabinet had already cleared the deal last month on October 4, the CCI approval now means that the deal, the first since the government announced a liberalised policy allowing foreign airlines to invest in domestic carriers, can be fully operational within, as little as, the next fortnight.

Keeping public sentiment on the fear of the two airlines monopolising the India Abu Dhabi routes, the CCI has cautioned

"This approval should not be construed as immunity in any manner from subsequent proceedings before the Commission for violations of other provisions of the Act. It is incumbent upon the parties to ensure that this ex-ante approval does not lead to ex-post violation of the provision of the Act,”

This deal could not have come a moment too soon for Jet Airways, which is literally running on fumes. The airline which is reeling under a debt of almost $2 billion, desperately needs cash to retire high cost debt.

In addition to the cash from the stake sale, Etihad has purchased Jet's landing slots at Heathrow, will buy the airline's frequent flier programme JetPrivilege, and will provide/arrange for loans under soft and discounted rates, which will used by Jet Airways to retire its high cost debt.

The measure of financial need at Jet is visible in the performance of the carrier in the second quarter of this fiscal, where it posted an eye-popping loss of nearly Rs. 1,000 Crores.

Jet Airways A330-200s grounded at New Delhi IGI airport. Photo copyright Devesh Agarwal.

The operations performance analysis show an airline which is seriously lacking clarity. The international operations which were the bulk of revenue, have seen much of the airline's Airbus A330-200 fleet grounded as non-profitable routes were withdrawn or curtailed. In the second quarter alone, the airline lost over Rs. 123 Crore ($205 million), or the cost of one new wide-body,  just keeping the aircraft grounded.

The airline was expecting to lease a couple of aircraft to Etihad, but could not do so due to "various reasons". Can we attribute this lack of clarity to the transition in operational control from Jet to Etihad?

Etihad is extracting its pound of flesh for its money. While both Jet and Etihad may publicly say otherwise, there is a clear re-alignment and re-organisation of operational strategy and divestiture of control to Etihad. Senior executives have resigned, including the CEO Nikos Kardassis, and Vice President Network Planning K.G. Vishwanath.

Recently the Business Standard reported that Rajeev Nambiar, sales head of Etihad, is likely to replace Sonu Kripalani, Jet’s vice-president (Sales). We had Bangalore Aviation had earlier reported the expected departure of Jet's Chief Commercial Officer, Sudheer Raghavan. The Business Standard report confirms our report saying

In another move Willy Boulter, Etihad’s vice-president (commercial and network planning), is likely to take over as Jet’s chief commercial officer, replacing Sudheer Raghavan. Sources say Raghavan is leaving the organisation, as his powers and responsibilities are being curtailed.

The commercial cooperation agreement (CCA) between the two airlines places enormous burden on Jet, requiring it to re-route its profitable and short-haul direct India-Dubai and India Sharjah routes via Abu Dhabi. One has to ask, why would someone replace a two or three hour direct flight with a four to five hour one-stop one? The CCA further goes to require Jet to re-route most of its international destinations via Abh Dhabi, with the exception of London, South-East Asia, and Australia-New Zealand.

Reports are of Jet mounting flights to Newark, Toronto, and Chicago via Abu Dhabi. Agreement aside, Abu Dhabi Chicago is almost 7,300 miles just 50 miles less than New Delhi New York, a route, that the Jet Airways Boeing 777-300ER was not flying non-stop due to its ultra-heavy first class suites. Is Jet going to modify its cabins to achieve Etihad's dreams?

The agreement will also require Jet to dilute its scissor hub at Brussels, not operate flights in competition to Etihad, with the reverse not being true, not operate and discontinue existing bilateral relations and code-shares with other airlines which may be in competition to Etihad.

In another Business Standard report

According to the terms of the CCA-a copy of which has been reviewed by Business Standard-Jet would have to route its services from India to Sharjah and Dubai through Abu Dhabi as soon as it becomes economically viable.

In what may additionally water down Jet's operations out of its hub in Brussels (Belgium), the Indian airline would have to develop Abu Dhabi as an exclusive hub for flights to North America, South America, Africa and the United Arab Emirates ('exclusive territories'). Canada too would be included in the list of "exclusive territories" once relevant amendments are made to bilateral air-services agreements to permit Jet to fly to Toronto via Abu Dhabi. Jet currently flies to New York and Toronto via its hub in Brussels.

The agreement, however, says exceptions can be made to allow Jet to mount non-stop operations between India and destinations in the 'exclusive territories' if Etihad agrees that it would be economically viable to do so. A Jet spokesperson, while declining to share details of specific plans, says, "As the Jet and Etihad alliance is being examined by the concerned regulatory authorities and their consequent approvals are awaited, it would be inappropriate for Jet to respond at this stage."

The CCA also restrains the Indian carrier from entering into code-share arrangements with third-party airlines, the impact of which may result in Abu Dhabi being bypassed as a hub for traffic to and from the exclusive territories.

According to the terms of the CCA, Jet would have to exit existing joint ventures or code-share arrangements with other airlines which can adversely impact business prospects of the alliance it has forged with Etihad. Jet can form code-share arrangements with third parties to destinations within exclusive territories not served by Etihad or its affiliates - but only till such time as they do not commence operations on these routes.

The two airlines have set up a coordination committee to "study" and implement "better cooperation" between themselves.

Quite clearly, it is goodbye Jet Airways and welcome to Jetihad Airways.

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Trip report: Air France A330-200 business class Bangalore Paris Mumbai - new service attitude is producing results

by Devesh Agarwal

Until recently, like many others, I was under the opinion Air France was a stuffy airline, an uncaring crew, and one I was not likely to fly any time soon. Recently, I was a guest of Air France to attend the launch of their new "Best and Beyond" campaign in Paris, and had the opportunity to fly the airline in business class from Bangalore to Paris and back to Mumbai.

Blue and white are soothing colours in the calm oasis of the Air France business class on board the A330-200

I also flew the airline, on my own account, in economy class between Paris CDG and Amsterdam Schiphol.

Over the coming weeks, I shall review various aspects of the airline, including trip reports, the Paris Charles De Gaulle hub, the Salon lounges, and also the Best and Beyond campaign.

Trip Report

Today, we commence with the trip report Bangalore to Paris Charles De Gaulle. AF191. Scheduled departure 01:50. Actual departure 02:30 (40 minute delay). Scheduled arrival 08:35. Actual arrival 08:50. Aircraft Airbus A330-200 registration F-GZCE.

Click on the photos below to see a high resolution light-box view.

New attitude

A critical component, of the new "Best and Beyond" initiative, meant to bring passengers back to Air France, is staff attitude. The change is visible starting right from the kerbside. I found a porter with a SkyPriority plaque waiting when you arrive.

The SkyPriority service is offered to all premium class passengers from Premium Economy upwards, and to all SkyTeam elite members from Silver level on upwards. Other than the erstwhile Kingfisher, I have not seen any other airline offer a kerbside porter service in Bangalore. Even overseas, I have seen it offered only to first class passengers.

SkyPriority porter at Bangalore airport kerbside.

Check-in, lounge and boarding

Despite my many requests for him to help other passengers, the porter insisted, and whisked me in to the terminal, expediting the cumbersome passport check by the CISF. I was late, arriving at 1:05am for a scheduled 1:50am flight, but which was delayed to 2:30am. Check-in was smooth, quick and efficient. My boarding passes were issued, and my baggage checked, all the way to Amsterdam.

The SkyPriority lane at the check-in desks at Bengaluru International Airport.

Off I went, through immigration, on to the customs desk to declare all my camera equipment, and then through security, where I am required to take out each piece of camera equipment before scanning the bag, and where my cigarette lighter was seized, as it is not allowed. This is contradictory to my experiences at the security checks of 12 different airports in three continents I have been to in the last six months. But security checks at Indian airports are a whole different subject.

I barely had time to step inside the Oberoi run lounge at the Bengaluru International Airport, and I was thankful. The lounge is badly over-crowded, stuffy, hot, and poorly equipped to handle to the volume of premium passengers departing Bangalore. I am told that the new terminal expansion will solve this problem. Expect a separate article on this subject later.

Boarding was a smooth affair, and well managed.

Cabin product

You step in to a very calm and soothing cabin decked out in navy blue and white. Air France aircraft may have a reputation for being dirty looking on the outside, but the inside was spic and span. The smiles and welcome by the cabin crew, were genuine and warm.

Note: All the pictures below were shot, by me, in the natural light of the cabin. No flash was used

The business class has 40 seats in two sections, in a six abreast 2-2-2 layout. 61 inch pitch and 21.5 inch seat width. It features shell seats and unlike some of the other angled lay flat seats, has a good headrest which conforms to the rest of the seat when it reclines fully. The arm-rest goes down during the recline adding to the width. You will also find the lack of the bottom end of the leg-rest. Instead Air France provides a type of cubby-hole inside the seat-back which I found more comfortable than any of the lay-flat seats I have experienced till now. I am a notoriously poor sleeper on angle lay-flat seats, but I did manage about four hours in Air France, which is the longest. So the seats win my seal of approval.

Business class seats in the upright and fully reclined position

Unlike other premium economy cabins which are more of an upgraded economy class, on the Air France Airbus A330-200, the premium economy cabin almost identical to the business class cabin, with the exception of the one additional seat to give a seven abreast 2-3-2 layout. There are 21 seats in three rows. 38 inch seat pitch, 19 inch seat width. I was later informed that Air France is the only airline that uses the similar shell seats in its premium economy class.

The Premium Economy class with shell seating, exclusive to Air France

The economy class cabin is bright in the national colours of France, blue, red and white. The 147 seats are in the Airbus standard, eight abreast in a 2-4-2 configuration. 32 inch seat pitch, 18 inch seat width.

The national colours of France, blue, red and white, reflected in the economy class cabin

The trip, service, meals, in-flight entertainment

We departed at 2:30am, about 40 minutes past our scheduled departure. Trip time 10h15m. The flight route was from Bangalore, NNW, over Mumbai, turning WNW skirting the southern coast of Pakistan, turning NW entering Iran near Chabahar close to the Pakistan border, through Azerbaijan, over Tbilisi, Georgia, over Sevastopol in Southern Russia, Moldova, turn westerly, skirting northern Romania, Hungary, Slovakia, southern Czech Republic, Germany, in to France.

The flight was quite bumpy from take-off, so meal service was slightly delayed. The French are gastronomes and the meals reflect it. The fish I had was on of the better ones I have had anywhere, on board, or on ground. Deliciously prepared, cooked to creamy perfection, not rubbery at all.

Fish entree, supper, post take-off, Bangalore to Paris.

Bangalore to Paris, supper and breakfast menu

The wine list was unusual and offered decent wines, but are not a match to the cellars of Singapore Airlines, Emirates, Qantas, or even Lufthansa. Considering wine and France are inseparable, this is an area the airline has to improve on.

Air France business class wine list

The pre-arrival breakfast service was good. Nice breads, butter, preserves, and an espresso machine on-board for my double espressos kept me happy.

Breakfast service prior to arrival in Paris

Through the flight, the crew puts out a small buffet near the galley with fruits, cheeses, small sandwiches, nuts and chocolates for those wanting a small snack.

Through the flight the cabin crew service was good, attentive and responsive. While Air France still has a way to go before it catches up to the leaders Singapore Airlines and Cathay Pacific, the change in attitude is refreshing, and service levels are close to its main European competitor Lufthansa. This is a crucial advance for Air France in its efforts to attract back lost passengers.

If there was a let down, it was the in-flight entertainment (IFE), audio video on-demand (AVOD) system. While the content was good, it was fairly limited, and the screens are not too big. The user interface, and its navigation is, clunky and tests your patience. For a passenger flying Air France long haul about two or three flights a month, it is okay, but more than that, and you will start feeling the pinch of the lack of volume in terms of content.

Paris Arrivals lounge

All Air France-KLM long haul international flights to and from Paris CDG airport are from terminal 2E on concourses K, L, M. The concourse names are no coincidence. Air France had ground staff stationed who patiently explained each enquiring passenger how to get to their respective flights. Another sign of the changed attitude at Air France.

A hidden gem of information, at Paris, is the Arrivals Salon Lounge of Air France. Tucked away at the junction of terminals 2C and 2A, this petite lounge is easy to miss. I must apologise to you, our dear readers, but the memory card of the pictures of this lounge got corrupted, and I have none to share with you at the moment. If I can revive the pictures in any way, I will surely share them.

If you are arriving in to Paris, or have a longish connection (two or more hours) to a Schengen country, this lounge is a must visit. It has a great set of shower facilities, with one of the most complicated shower temples I have seen. Multiple jets blasting hot water just soothe those tired muscles. The lounge provides a complete toilet kit with L'Occitane en Provence personal care products, including a razor and toothbrush.

Once showered, there is a great breakfast. Despite a small area, I found the breakfast spread better than the large Salon departure lounges in concourse K when I departed back to Mumbai. There is the usual fantastic French breads, along with butter, preserves, and charcuterie. Eggs, fruits, yoghurt, crackers, cheese, varieties of drinks complete the feast.

Paris Amsterdam Paris domestic flights

Showered and fed, I headed to terminal 2F from where all the Air France flights to Schengen countries depart. Very honestly, this one hour flight both onward to Amsterdam and return, was extremely routine, pretty much any other short-distance domestic flight. However, even on this short duration, the change in Air France attitude was noticeable.

Air France A320 cabin. The business class has the centre seat blocked off and marked with a navy blue head rest cover.

The arrival concourse of Terminal 2F is extremely futuristic with its metal and glass construction. Makes on feel like they are in some Sci-Fi movie.

The futuristic looking Terminal 2F arrivals at Paris Charles De Gaulle airport

Paris Mumbai flight

An almost carbon copy of the Bangalore Paris flight, except for a more elaborate lunch starting with an L'amuse-bouche, appetiser, main course, cheese tray, and dessert. Great for a foodie like me.

Paris to Mumbai lunch menu

The aircraft coincidentally was the same one I had flown from Bangalore to Paris, just five days earlier, Airbus A330-200 registration F-GZCE. We departed on schedule, and thanks to some fantastic tailwinds, made it to Bombay one hour ahead of schedule.

Summary

I flew Air France after a gap of almost 25 years. The business class is much like other European carriers, but with a much more calm and soothing touch, compared to the energy of Lufthansa's new business class. The change in crew attitude was refreshing, and it appears to be yielding results. There was only one seat free in business class, and none free in premium economy on my outbound flight. Even on the return to Mumbai, the flight had just one seat empty.

I was informed later, that AF191/192 the Paris Bangalore route goes full almost all days of the week in both business and premium economy classes. If anything, Air France has spare seats only in economy class. Considering it was a Thursday night I flew to Paris, and a Wednesday morning I returned to Mumbai, this shows the positive results of a good overall hard and soft product.

Note: I was a guest of Air France on the India to Paris segments. The Paris Amsterdam v.v. segments were on my account.

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Analysis: Etihad announces huge increase in flights and seats between Abu Dhabi and India

Bangalore-Abu Dhabi-Chicago, Mumbai-Abu Dhabi-New York, Delhi-Abu Dhabi-Newark amongst new flights requested

by Devesh Agarwal and Vinay Bhaskara

Image Credit: Etihad Airways

On the back of the new bilateral air services agreement which has almost quadrupled capacity, Etihad Airways, the national carrier of the United Arab Emirates, will greatly increase both seats and flights for travel to and from India, introducing more flights and wide-bodied jets by the end of this year, and further increases and new routes next year, subject to regulatory approval.

From 1 November this year, Etihad Airways plans to more than triple the number of seats it now offers on the prime Abu Dhabi – Mumbai and Abu Dhabi – New Delhi routes, reflecting the growing importance of the Indian market, and delivering significant economic benefits to the economies of India and Abu Dhabi.

Enriching the expanded schedules will be new connection opportunities between Etihad’s global network and its expanded Indian services, via the airline’s Abu Dhabi hub.

The President and Chief Executive Officer of Etihad Airways, James Hogan, said: “India is one of the world’s fastest-growing destinations, and a key market in the growth strategy of Etihad Airways.

“Following the recent signing of a new air services agreement between India and the UAE, we now have the opportunity to add significant capacity between the two countries, not only meeting existing demand for trade and tourist travel but also ensuring that we can meet the continued strong growth which is expected between our two countries. The big winners will be our passengers and freight customers and the economies of India and Abu Dhabi.”

By 31 December, 2013, Etihad Airways plans to:

• Increase from daily to double-daily its Abu Dhabi-Mumbai and Abu Dhabi-New Delhi flights;
• Use wide-bodied Airbus A340-600 aircraft on one of the daily Abu Dhabi – Mumbai flights, offering First, Business and Economy Classes, replacing a Jet Airways A330-200
• Use wide-bodied Airbus A330-200 aircraft on one of the daily Abu Dhabi - New Delhi flights, offering Business and Economy Class, replacing an Etihad A320
• Upgrade daily Abu Dhabi – Chennai flights from 136-seat Airbus A320s to new Airbus A321s, seating 174 passengers with an expected two class configuration of (12J / 162Y)
• Subject to regulatory approval, Etihad also intends to codeshare on a wide range of flights operated within India by Jet Airways. Jet will feed Abu Dhabi from eight cities initially: Ahmedabad, Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Thiruvananthapuram and Cochin

Specific details of new routes between Abu Dhabi and India and codeshare services with Jet Airways will be announced progressively, as approvals are received and operational details are finalised.

Separately, Jet Airways is set to move its international scissors hub for services to the United States to Abu Dhabi from Brussels. Jet will launch Mumbai-Abu Dhabi-Newark, Bangalore-Abu Dhabi-Chicago, and Delhi-Abu Dhabi-New York JFK. Interestingly, no mention has yet been made of services to Toronto, which Jet Airways currently serves as the final leg of its New Delhi - Brussels - Toronto services. However, Toronto-India traffic is notoriously low yielding. Furthermore, the UAE and Canada have a tense bilateral agreement, so it's likely that Jet might not even be allowed to operate to Toronto via Abu Dhabi.

Either way, the massive expansion from Jetihad brings the carrier to parity in the Indian market with Middle Eastern rival Emirates, who generates 12% of its network traffic from India. As the Jetihad partnership continues to solidify, expect to see more Indian expansion from both carriers.

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