Jet Airways increasing low-fare capacity in reaction to industry trends

Jet Airways plans to increase domestic and short-haul international low-fare capacity in response to rising LCC competition in the Indian market. The move will entail a change in its current business model to be “in sync with market realities.” However, concerns centre on the potential pressure on earnings the shift in strategy could entail. [1905 words]

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This report contains the following subheadings:

• Up to 90% of capacity to be in low-cost medium in five years or before
• Suffering from sharp drop in yields; Full service model viability questioned 
• Potential profit pressure; Legacy costs a concern
• Jet Airways considers merging JetLite with Jet Konnect
• Jet Airways to add routes in Southeast Asia/Gulf in next six months; Europe expansion in future
• Embarking on a cost-reduction programme
• Jet Airways expects 2HFY12 to be better than in previous years

This report contains the following charts and tables:

• Monthly domestic India LCC penetration levels (%): Jan-2006 to Jun-2011
• Asia Pacific domestic LCC penetration by capacity (seats): Seven months to Jul-2011
• Intra-regional LCC penetration by capacity (seats): Seven months to Jul-2011