I read an interesting discussion in the news yesterday. A report published in the Business Standard in India wrote about senior Jet Airways management, including chairman Naresh Goyal and CEO Nikos Kardasis camping in Abu Dhabi to thrash out a deal for Jet Airways getting an investment from Etihad Airways. This is on the heels of Indian aviation opening up for foreign investment last week:
Four days after the Union cabinet allowed 49 per cent foreign direct investment in aviation, a new strategic alliance seems to be on the cards. Jet Airways chairman Naresh Goyal and his top management are in Abu Dhabi for the past couple of days to negotiate with Etihad Airways, fuelling speculation of a possible alliance and investment in the airline.
Jet Airways and Etihad have a code share alliance since 2008. In 2011, Etihad CEO James Hogan sought the Indian government’s permission to include more India-Abu Dhabi routes under the agreement. Etihad, which has been picking up stakes in airlines across the world, is enthusiastic about investing in India. Goyal, who was once a staunch opponent of opening up of the sector to foreign airlines, has now changed stance and has welcomed the government decision.
Jet Airways spokesperson could not be reached for a comment. A senior executive from the airline declined comment. However, another official from the airline ruled out the FDI angle and said the talks with Etihad could pertain to Jet’s international expansion, adding flights to Gulf and seeking to join Star Alliance comprising top airlines such as Lufthansa, Singapore Airlines amongst others. Etihad did not give a specific comment for the story.
Etihad has also had discussions with Kingfisher and SpiceJet which are scouting for funds. “Etihad Airways welcomes the government’s decision to allow foreign investment in Indian carriers. The Indian aviation industry offers tremendous potential, with significant passenger movement on domestic and international sectors.” Etihad said in a statement.
Now, first, my humble submission. Jet Airways is anyways trying too hardand trying to get into a partnership almost all over the place where, either its strategy is to eventually sign on with one partner/alliance, but it is using the noise it is creating to get itself the best deal. I don’t think that it is a great idea, because sooner than later someone will pull the trigger and walk off the negotiation table.
They really have no strategy at all and going on a cowboy chase trying to get whatever they can lay their hands on.
A quick rewind:
- Jet Airways is already in talks with Star Alliance (read here)
- Jet Airways signed up a pretty massive codeshare arrangement with Lufthansa, putting up each others’ codes on almost all the flights of the other codeshare partner (Read news report here)
- Jet Airways is making noises that it is talking to oneworld and Skyteam as well (read here)
- And now, Jet Airways wants to make a deal with Etihad!!!
Etihad Airways’ strategy is well known by now. They are a little behind Emirates in the game, and want to match up by buying out stakes and making strategic alliances around the world. Virgin Australia, Air Berlin and Aer Lingus stand testament to this strategy.
Jet Airways strategy on the other hand is not clear. Like I said above, either they don’t know what they want or they are pretending to not know what they want. Which part of their strategy will pan out, we are not sure now. The Lufthansa codeshare agreement and Star Alliance talks could be seen as a move in a single direction, also taking into account that Jet Airways picked up a lot of slots to fly to Germany from Winter 2012 onwards.
However, if they choose to go the Etihad way, it does not seem possible that they will be able to find their way into Star Alliance. Hey, how many transit points can you establish outside India with the same metal to fly people to the rest of the world? Abu Dhabi, Frankfurt, Brussels (their own hub right now…)??
If this report is true, then it will be great to watch out for two reasons:
- Who does Jet Airways finally end up with? (Star Alliance, Star Alliance + Lufthansa, oneworld, oneworld + Etihad, Skyteam, Skyteam + Delta + KLM, Etihad) Like you read, the possibilities they’ve examined are more than the number of feet a centipede has.
- Who will Etihad end up with? Etihad has too much of choice in India. They can pick up Kingfisher at dirt cheap prices, SpiceJet is also talking to them as per news reports and then there is Jet Airways asking for an $800 million valuation while Etihad wants to invest at half of that valuation.
Hence, this is an interesting game of pick your partner. Lets see who gets whom in the end. Where do you think this is going to go? Put your views in the comments section please.
- Will Jet Airways not go on to Star Alliance? What??
- Are the stars aligning for Jet Airways in Star Alliance? Air India is now a no go!
- Star Alliance and Jet Airways – 3rd time lucky?