Jet, Kingfisher form alliance to cut costs

“This is a long-term alliance on a sustainable basis and not a matter of convenience,” Goyal, emerging after a two-hour long meeting with Mallya told waiting newspersons but declined to take any queries saying they would answer when the two visit Hyderabad Airshow on Tuesday.

“Both the parties recognise economic realities and benefits of the alliance… it is a meeting of both mind and heart,” Mallya, who earlier received Goyal, his wife Anita and entourage of top officials at his office at his Ville Parle office said.

The Alliance would bring the two airlines, which account for nearly 60 per cent of market share, to work together on seven fronts, including route and code sharing as also sharing of crew, a move that would help them cut exorbitant cost that had been putting enormous pressures for the last 4-6 years. Asked if the alliance could lead to a merger or equity participation, Goyal said, “there is no equity involved… we will give details when we meet at Hyderabad Airshow on Tuesday.”

In a joint statement issued after the meeting, the two corporate honchos said, “While maintaining their legal entities and brand entities, both Jet and Kingfisher will examine co-branding opportunities and have formed core committee of senior management personnel from both companies who will drive the various identified initiatives forward with immediate effect.”

Goyal, accompanied by wife Anita who is also Director, Marketing, of Jet, Executive Director Saroj Dutta, CEO, COO and other top officials, walked into Mallya’s office for working out the details.

Mallya is believed to have met Goyal at his office earlier in the day.

“Both Jet and Kingfisher fully realise that better understanding of supply and demand in this capital and labour intensive industry is the key to profitability and enhancement of shareholder value.

“I look forward to this alliance delivering superior quality, cost savings, flexibility and enhance consumer value, which is the hallmark of all successful alliances,” Mallya said.

While Jet had earlier acquired ailing Air Sahara, Kingfisher had taken over the crisis-ridden Deccan to emerge stronger till the rising costs and global meltdown hit them hard with each of the entity losing about Rs 10 crore a day.

The two corporate leader had met Aviation Minister Praful Patel last week, presumably to get his approval, for the alliance.

Both Mallya and Goyal said had the alliance not come through, the two could have suffered and paved way for going back to monopoly days in the Indian sky where state owned entities alone operated.