New Delhi: Jet Airways 2.0, under new promoters, hopes to start operations by the July-September quarter, the airline’s chief executive Sanjiv Kapoor told Mint on Friday. The airline also hopes to operate proving flights by the April end, using a leased Boeing 737 aircraft, Kapoor said, adding that he hoped to get the AOC (air operators certificate) revalidated by early May. Edited excerpts from the interview.
What is your fleet plan like?
Our fleet at least for the initial year or so will be leased. But, there’s sufficient availability of aircraft from lessors, both brand new and older ones. There are lots of aircraft that we can consider. We will decide what’s best for us given our needs, and cost benefits. I don’t want to give a precise number, but we know it’s important to reach a certain scale quickly as it is a very scale driven business. Of course, when we place an aircraft order, it will be for modern and fuel-efficient planes.
Will you be looking at a single fleet or a mixed fleet?
We are starting with domestic operations. So, it is safe to assume that we will start with a single fleet (aircraft).
Your tweets state that Jet Airways 2.0 will have a hybrid model. Can you elaborate?
There seems to be a lot of misunderstanding about the hybrid model. It doesn’t mean that it’s going to be no-frills. By hybrid, we mean a model that is not a traditional FSC model, which has outlived its usefulness. Pretty much all FSCs operate a hybrid model. We intend to have a product that is in time with current customers‘ needs and reflects changing customer preferences as well. Just having buy on board, or no meal is not the only definition of hybrid.
Have Jet Airways 2.0 resolved issues related to slots at Mumbai and Delhi airports?
I was not involved with the NCLT process. But, my assumption and hope are that we will get a fair set of slots as we grow.
Is this the right time for a new airline to enter the market?
The flippant answer is that the timing of the entry of an airline is like buying stocks. For every buyer of stocks, there are sellers, and people placing opposite bets. But, on a serious note, if investors, anybody who’s entering a market, is able to enter at a low, they can scale up in time for the high. Markets and businesses seem to be cyclical for various reasons. We hope that our timing works out in our favour.
How do you plan to keep your costs under control, something that Jet Airways was unable to do before being grounded in 2019?
While fuel costs are not in our control, other costs that can really determine competitive advantage or failure are the costs of the large contracts that we will enter. These are not only aircraft maintenance, and engine maintenance contracts but also other contracts like IT, ground handling, outside service provider contracts, call centre contracts, distribution costs, etc. Each one of these costs has to be controlled.
What about funding from the promoters?
We have significant funding from new promoters. There is a 60 million dollar liability (as part of the NCLT process) passed on to new promoters, which has been accounted for. Our promoters have committed $180 million of initial funding. Of this $120 million will be used to fund the airline, which is actually a pretty significant sum. And this doesn’t include SLB (proceeds from Sale and Leaseback of aircraft). We will have access to SLB cash flows over a period of time on top of the promoter funding. We also have assets of old Jet Airways that can be sold to generate funds.
What are your plans with the older planes of Jet Airways?
Much of the fleet that is left is wide-body aircraft, which we will not use anytime soon as we will restart as a domestic airline. There are a few narrow bodies left, which are old. So, it’s unlikely we will be using them.
What are your plans for international?
The regulations require us to fly 20 aircraft on domestic routes before applying for international flights. So, when we reach 20 aircraft, we intend to apply for international flights.
Are you bracing up for a fare war when you enter the market?
Price is a factor of demand and supply. We have plans and ideas which will allow us to differentiate ourselves from the competition and hopefully allow us to fly passengers.
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