Jet Airways may review LCC strategy to take on IndiGo

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Jet Airways may review LCC strategy to take on IndiGo

Jet Airways has been facing stiff competition from carriers like Indigo and Spicejet and this is forcing India's largest private sector airline to effect a mid-course correction, reports CNBC-TV18 quoting Forbes India.

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Jet Airways has been facing stiff competition from carriers like IndiGo and SpiceJet and this is forcing India's largest private sector airline to effect a mid-course correction, reports Forbes India's Cuckoo Paul and CNBC-TV18's Payaswani Upadhyay.

Two weeks ago the top management of Jet Airways went into a huddle to review its low fare carrier strategy. The upshot of this meeting is that the airline will revive its low cost carrier strategy to take on competitors like Indigo, which enjoys nearly 18% of the market share.

So what's going to happen?

The airline will adopt a two-airline structure -- one full service carrier catering to the premium-end flyer, and one low cost carrier.  This means its JetLite and JetKonnect brands will be extinguished, to make way for the new low cost carrier.

The management, sources say, has realised that its Konnect strategy does not make long-term business sense, and both Jet Konnect and JetLite have failed to become true low-cost carriers.

So,since Jet Airways and JetLite have different operational licenses, the new LCC will use the JetLite license.

Also, operating a low cost carrier requires a cost structure that is different from that for a low fare carrier. So both services will have separate management and operations.

The new LCC will operate on domestic and international routes to compete with SpiceJet, IndiGo and Air India Express.

Meanwhile, the full service carrier will operate in the creamy domestic and international trunk routes. However, it is still unclear whether this new strategy has received Naresh Goyal's blessing and when contacted, Jet Airways responded that this information is speculative in nature.