Airways with a 25.3% market share has made a surprise move of launching an additional low cost carrier brand ‘Jet Airways Konnect’ to augment its existing LCC ‘JetLite’ bought from Sahara Airlines. The move has raised questions about the need for such a move and that too in down times.
As the fine print suggests that there the only difference between Konnect and JetLite shall be that in the former, one will have to buy meals on-board. The fare structure, routes and services would also be quite similar.
There has been no exact reason given for launch of Konnect but it may well turn out to be a smart move by Jet Airways.
Firstly, there is a legal dispute between Jet and Sahara over payment of dues and as such Jet would not like to transfer more assets to the disputed company. Due to economic slowdown, LCC stands at an advantage, and as such Jet may replace mini metro routes with LCC and again replace them with full service carriers at a later stage.
This may help Jet in arresting the dip in load factors and cater to price sensitive sectors, without any extra involvement of staff or legal hassles.
Jet may also use the new aircraft to deploy on metro routes also during non-peak hours and even on international routes. The move could also be seen as a precursor to imminent consolidation to LCC market in India.
However, with increasing competition and reducing margins, the going will not be that easy. And with too many brands, there may be a problem of brand integration and optimum capacity utlisation.