After clearance by a three-member arbitration panel, Jet Airways finally struck a deal on April 12, 2007 to buyout rival air carrier Air Sahara for Rs. 1,450 cr, about 40% less than its initial offer of $500 mn (approx. Rs. 2,200 cr). Jet has won the battle in bagging Air Sahara at a `bargain' price. Air Sahara would be renamed as `Jetlite', positioning it as a value-based carrier that offers value to passengers at low fares to compete with low-cost carriers. Post-merger, Jet-Sahara bagged a combined market share of about 32%. This merger signifies the beginning of consolidation in the sector.
Air traffic in India is growing by leaps and bounds at the rate of 20% per year from 43.4 million to 52 million—one of the highest in the world—which has been driven by higher disposable incomes of an average Indian. To meet the growing air traffic, the country is in need of 852 additional aircraft over the next two decades worth more than $72 bn.
Jet operates over 320 flights to 44 destinations across the country and six overseas. Jet, which was incorporated as an `air taxi' operator in April 1992, started its operations in May 1993. Taking advantage of India's `open skies' policy as part of its economic liberalization, it diversified into a full-service scheduled airline that would compete with state-owned Indian Airlines, which enjoyed a monopoly in the domestic market. Jet initiated international operations in March 2004. Indeed, it is the first private airline in India to fly international. However, there is a significant slippage in its fortunes and market share in recent times, as the low-cost carriers are making inroads into the domestic market. Hence, Jet's share has declined to 27% from 40% a few years ago in the Indian domestic aviation market. Though Jet's market share has come down, it is still dominating the Indian domestic airline industry. |
