India’s Directorate General of Civil Aviation (DGCA) has this week begun redistributing some of the airport slots left unused by Jet Airways as a result of their financial predicament. Around 40 slot pairs at Mumbai have already been dished out to other carriers, with around the same number predicted to be reallocated over at Delhi International.
India’s aviation regulator, the DGCA, has been reallocating airport landing slots that aren’t being used by struggling airline, Jet Airways. So far, they’ve handed out around 40 slot pairs at the country’s busiest airport, Mumbai International, and are planning to do the same with a similar number of slots in Delhi.
Jet Airways, with more than 75% of its planes grounded, have left a big gap in seats for the peak travel season. As many as a million seats were lost between January and March, causing prices to spike as a result. By reallocating some of Jet’s slots in time for the summer season, the DGCA is hoping to drive prices back down and ensure enough Capacity to cope with the seasonal demand.
Who’s taken the slots?
The airlines announced to have launched new routes from Mumbai International, as a result of snapping up the Jet Airways slots, are:
- AirAsia India
Around 40 slot pairs have been reallocated so far. 13 went to IndiGo, 10 to SpiceJet, eight to AirAsia India and seven to Vistara. The reallocation has been called ‘temporary’, with schedules booked up to July 15th.
None of Jet Airways’ slots at Delhi International have been reallocated yet. However, the DGCA says they will be looking into redistributing around the same number of slot pairs over the coming weeks.
Good news for passengers and airports
Jet Airways are estimated to have a total of around 400 slot pairs going unused at airports across India. Right now, they are operating with just 26 aircraft, less than a quarter of their fleet, so these slot pairs are going to waste.
The DGCA says that once the carrier resumes full scale operations, their slots at the two main airports will be given back to them. For the airports, this is good news, very good in fact. Mumbai is one of the most congested airports at the world, with virtually zero unallocated slots left. Delhi is only marginally better, so having slots sitting around not performing was not good for business at either of the two airports.
For passengers, it’s also good news. The cost of flights has increased year on year by 15% due to capacity cuts. The cheapest Mumbai to Delhi fare last week was priced at around Rs 8,500 ($122), double the fare during the peak winter season. By releasing these slots, the DGCA is hoping that fares will begin to stabilize, and even decrease in time for the summer season.
What hope is there for Jet?
The financial situation for Jet has been one problem after another. Having met with lessors in January to reassure them that a rescue plan was in place, the founder and chairman, Naresh Goyal, failed to convince them not to take back their planes. Reportedly, talks crumbled when Goyal lost his temper, and the relationship between the carrier and the lessors reached breaking point.
Despite Goyal’s recent departure, the lessors are still not happy with the situation. Many have grounded their aircraft as a result. Last week, two Jet planes were deregistered under instruction of Dublin base lessor, Avolon. Reuters reports that lessors have asked the aviation authority to de-register as many as 18 aircraft altogether.
There is a light at the end of the tunnel for the beleaguered carrier, as they are rumored to have a number of investors considering a stake in the business. The Business Standard reported that Etihad are considering another cash injection. They’ve bailed Jet out previously and used to hold a 24% share in the airline, but this has recently been watered down to just 12.5% due to restructuring by the banks.
Other potential investors include TPG Capital, the government supported National Investment and Infrastructure Fund as well as Delta Air Lines. Any potential investor would need to take a minimum of a 31.2% stake in Jet Airways.