India Markets closed

Jet Airways crisis: Transfer of slots to other carriers temporary, govt assures lenders

Arun Nayal
jet airways, jet airways crisis, aviation sector, aviation industry

With growing apprehension that the shortlisted bidders for Jet Airways may walk away as the carrier s prime slots are being allotted to rival airlines leaving nothing for the new buyer, the civil aviation ministry stepped in on Tuesday.

Allaying all such apprehensions, the civil aviation ministry said the current vacant slots of Jet are being allocated to other airlines purely on a temporary basis and once the airline resumes operations, these slots will be returned.

To reduce inconvenience of passengers and facilitate induction of additional capacity, it has been decided to allot some of the slots vacated by Jet to other airlines purely on a temporary basis, for a period of three months, the civil aviation ministry said in a statement on Tuesday.

The ministry also assured Jet of protecting its historic slots as per the applicable norms and regulations.

The Directorate General of Civil Aviation (DGCA) regulations mandate a slot to be vacant if it is not flown for a month. However, bankruptcies/restructuring are treated as special cases which may lead to an airline holding its slots without flying out of them, till the time it is in possession of its operating licence.

Jet had a domestic market share of 15% before it got engulfed in trouble, leading to grounding of aircraft. Its flight share on top-10 city pair routes was much higher at 24%. This disproportionate capacity disruption on typically high yielding metro routes can drive fare prices up further, and that s the reason that the ministry is allocating the routes to other carriers.
As is known, on Monday, the State Bank of India-led consortium of lenders and Jet Airways employees unions had urged the government to secure its international landing slots to protect its valuation.

However, the protection of slots can only be done with regard to domestic routes and not international ones as they do not fall in the purview of the government. Aviation analysts explained that international slots are governed by the airports of the country where the carrier flies and these routes are allocated by the airports of the concerned countries.

For instance, at the busy London Heathrow airport, four daily slot-pairs held by Jet have already been allocated to Delta Airlines and Etihad Airways. Edmond Rose, chief executive officer, Airport Coordination (ACL), an independent slot coordination company, told FE that these transfers are permanent.

From the start of the Summer 2019 season, one daily pair of slots for Summer 2019 was transferred from Jet to Delta Air Lines. On April 12, the other three pairs of Summer 2019 slots were transferred to Etihad Airways. All the transfers are permanent and Jet Airways has no claim on the Summer slots, Rose said in an e-mail response.

Similarly, Singapore s Changi Airport said Jet, which was operating two daily services from Delhi and Mumbai, ceased operations on April 11. At the start of the Northern Summer 2019 season, Jet Airways was operating two daily services between Singapore and India to the cities of Delhi and Mumbai. Flight services by Jet Airways to these cities ceased on April 11, 2019. We will continue working closely with our airline partners, and evaluate their slot requests on a case-by-case basis, a Changi Airport spokesperson said.

In such a scenario, the best course for Jet’s lenders would be to accept the offer by the Air India chairman and managing director, Ashwani Lohani, of operating its grounded aircraft on five international routes on a dry or wet lease.

Lohani had last week written to the lenders of Jet Airways asking if it can fly five of Jet’s grounded Boeing 777 aircraft on international routes. He had offered to operate the Mumbai-London, Delhi-London, Mumbai-Dubai, Delhi-Dubai and Delhi-Singapore sectors.

Also read: Govt to allot some Jet Airways slots to other airlines on temporary basis; all you need to know

Jet owns 10 wide-body Boeing 777-300 ER planes, along with a few Airbus A330s, which it operated on medium and long-haul international destinations.

Jet accounted for a solid 14% of India s international airline capacity share before disruption. With India exhausting bilateral flying rights on most short-haul destinations, vacation of slots by Jet is a positive for airlines such as Indigo, SpiceJet and Vistara, who are all aspiring to ramp-up their international operations, Kotak Institutional Equties had recently noted in its report. It had added that some of India s international air traffic carried by domestic airlines may be lost to foreign players, given Air India is the only airline with a fleet of wide-bodied aircraft. Vistara does have plans of adding such aircraft, though it may be unable to do so in the near-term.