After months of will they, won’t they, Jet Airways and the KLM/Air France group finally came together to the table today to make an enhanced cooperation pact.
Announcement for Jet Airways cooperation with KLM/Air France
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.
Bottomline
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.
whether flights of jet airways operated by Air France are also cancelled or they are in service ?
It seems to me that all this is being engineered by Delta. Delta’s continued profitability and strong cash position has made it one of the world’s most powerful carriers and it is finally flexing its muscles.
Apart from it’s stake in Virgin, Delta also owns 10% of Air France- KLM. Delta’s interest in India has also been no secret. It has tried serving India several times albeit unsuccessfully as it simply couldn’t sustain a decent yield.
Delta’s animosity with the ME3 carriers has also been driven by this frustration. It never competed with ME3 carriers on its trans-Atlantic or trans-pacific flows however was essentially blocked out of the Indian market.
It’s a well known fact that India is the largest source market for the North American services of ME3 carriers and this annoyed Delta to no end.
With this new alliance, Delta will essentially pick up India bound passengers from all its European hubs. Moreover, by engineering this European JV, Delta has not only isolated Jet from Etihad but has disrupted the business models of the ME3 carriers by dominating their biggest market- westbound traffic flows from India. This space is sure going to get even more interesting.
Etihad has already burned its hands with AirBerlin & Alitalia, so, they may be looking for a way to sell their stake.
Wonder what will happen to 9Ws partnership with United & Virgin Atlantic & Air Canada to shuttle traffic out of LHR to the USA and Canada respectively. One would imagine that with this venture they would rather have passengers go to North America via their AF and KL alliance rather than via London. Thoughts?
Wait what!!! Never know, Jet might as well just join Skyteam and go all the way !!
The question about the Etihad partnership hangs in balance… As jet was supposed to develop AUH as an Exclusive Hub! Now a lot of ex-india EY traffic to Europe, would be on JET-KLM & AF.
Maybe EY would need to really market itself as a great service & hard sell AUH as a Great Transit stop for a night or 2, to keep up!
I am assuming now that ALL KLM flights operating anywhere in the world including ex-India will add to the JP Tier miles and Tier points balance – earlier it was only miles accural from select KLM flights but those miles were not recognised as part of JP Tier miles balance as per the calandar year of the members membership. Also Jet needs to start selling both Jet and KLM flights on their website Which currently they are not doing. All in all this should be good.