Commonly known as a joint venture, this pact will allow Jet Airways, KLM and Air France to share the costs and revenue from all the flights between India and Europe being operated by the three airlines. That means it does not matter if the flight between Mumbai and Paris is operated by Jet Airways or Air France now because eventually, both the airlines will commercially benefit from the flights on either carrier.
Delta, which has their own strategic alliance with Jet Airways allowing for taking over Jet Airways customers from Paris, London or Amsterdam and flying them to the USA on a Delta or Virgin Atlantic flight, interestingly is not a direct party to this deal between the carriers.
Delta already has a transatlantic partnership with Air France and KLM on similar lines, and chatter for the longest time was about admitting Jet Airways to their existing joint venture. It might just be the case that Delta may buy a slice of Jet Airways at a later date. If this happens, they perhaps replace Etihad rather than have a fresh 24% of Jet Airways, which will be an embarrassing situation around the boardroom.
Jet Airways started their collaboration with KLM Air France about three years ago with the launch of Jet Airways to Paris from Mumbai. Subsequently, Jet Airways moved their Europe mini hub from Brussels to Amsterdam, and that is when things became serious between the partners since Amsterdam gave the scale to Jet Airways that Brussels did not.
Since then, Jet Airways has retimed some existing flights and launched new flights from Bangalore and Chennai to Amsterdam and Paris as well. Returning the favour, KLM has come back to Mumbai after 16 years, operating a 787 three times a week to the city. All these flights, of course, have a similar motivation, not just to carry O&D traffic but to carry traffic for onward transit to the Americas as well.
While anticipating a question about the partnership with Etihad Airways which owns 24% of Jet Airways and 50.1% of the frequent flyer program, Jet Airways chairman Mr Naresh Goyal did state that the partnership will continue to exist and no changes happen to that partnership just because this one would launch today onwards. How that works out in practice really needs to be seen however since eventually everyone is looking for a piece of the American – Indian market and we don’t know how many people want to travel via the Middle East and how many via Europe.
The answer was actually a deflective one, since Jet Airways response to a change in the Middle-East strategy was, “they want to serve the 7 million Indians in the Middle East.” That they did not address the part of the significantly large India-USA market via the gulf should hold an answer to how they will move forward with that partnership.
Of course, all the airlines are promising their frequent flyer members to get coordinated benefits as well. No details to this effect have been revealed as yet.
This partnership is significant from an Indian and European perspective, and even interests Delta to see how their future in the Indian space. Of course, Etihad is sulking in a corner, but we need to wait and see how they will react.