Mumbai: Jet Airways (India) Ltd has initiated talks with Delhi-based low-fare carrier SpiceJet Ltd for an operational alliance in engineering and ground operations, said two executives from each airline.

The alliance will be for Jet Airways’ low-fare unit JetLite (India) Ltd and its all-economy class product Jet Airways Konnect.

Seeking cooperation: The alliance will look at ‘aircraft on ground’ issues and the airlines will pool parts, tools, spares and services of engineers to make the planes airworthy as soon as possible. Abhijit Bhatlekar / Mint

Since “SpiceJet, JetLite and Jet Airways Konnect largely operate Boeing 737 planes, the proposed operational alliance is looking at synergy of operations and cross-utilization of resources”, said another person familiar with the development, adding the move may shave both airlines’ engineering and maintenance costs by 35-40%.The arrangement will allow planes from the airlines to be maintained or serviced at airports where one of the partners has stronger resources, but there is “no proposal for code-sharing, cross-selling of tickets and joint fuel management”, this person told Mint.

This alliance will essentially look at “aircraft on ground” (AoG) issues, he said, adding that the airlines will pool parts, tools, spares and services of engineers to make the planes airworthy as soon as possible.

“The initial priority of this alliance was only JetLite, but later Jet Airways Konnect was also included, considering the similarity of the fleet,” said this person.

None of these persons wanted to be identified because the talks are confidential and still at an early stage.

“I am not aware about any developments. If at all there is something in this, it would be done at our chairman’s level,” said Jet Airways’ executive director Saroj K. Datta.

A spokeswoman for SpiceJet declined to comment, saying she did not have any information on the matter.

Jet Airways, which is India’s largest private carrier by passenger traffic, had in October 2008 announced an operational alliance with direct rival and second largest private airline Kingfisher Airlines Ltd for both flights and ground operations. The Competition Commission of India (CCI) sought information on the alliance in August, posing a hurdle to the cooperation plan.

Kingfisher Airlines vice-president (corporate communications) Prakash Mirpuri said the Jet-Kingfisher alliance is still intact.

SpiceJet operates 127 flights daily to 18 cities with 19 Boeing 737 aircraft while JetLite operates a fleet of 23 planes, of which 16 are Boeing 737s. Two-thirds of Jet Airways capacity is through its all-economy and low-fare product Jet Airways Konnect, which operates 56 planes.

At least half a dozen senior executives from each carrier are working on the operational alliance and hope to reach a working arrangement by the end of November, the person quoted earlier said.

Kingfisher Airlines chairman and managing director Vijay Mallya, at the company’s 14th annual general meeting on 29 September, said he did not want to comment on the alliance, but said both the carriers were cooperating.

“These are conversations that are best kept in private,” he said at the time. “Significant progress is there by helping each other in reducing cost. It will make significant impact for both carriers. The alliances are common worldwide.”

This is at least the third time that an attempt has been made by private carriers to form an operational alliance. In early 2006, private airlines operating Airbus planes came together to form an association to share engineering resources, equipment, technical manpower and training requirements. The alliance included carriers such as Kingfisher Airlines, GoAir, Air Deccan (which was later acquired by Kingfisher) and IndiGo. However, the proposed alliance never took off due to differences of opinion among member airlines.

SpiceJet shares rose 3.07% on the Bombay Stock Exchange (BSE) to close at Rs40.25 on Thursday while Jet Airways shares declined by 1.63% to close at Rs428.15. The benchmark Sensex rose 0.22% to close at 16,843.54 points.

News Source – http://www.livemint.com/2009/10/08230310/Jet-Airways-SpiceJet-in-talks.html?h=B