Inter-organizational relationship and structural implications of Kingfisher & Jet Airways tie up
India’s two largest private airlines Jet Airways and Kingfisher Airlines joined hands on October 13th, 2008, in Mumbai. They announced an alliance for sharing of their network and resources to meet the challenge of aviation downturn.
The deal, was aimed at reducing costs in the face of mounting losses in the aviation sector.
Announcing the alliance, both Naresh Goyal of Jet Airways and Vijay Mallya of Kingfisher Airlines said the coming together was in tune with the global practice of reducing killing costs and clarified that there was no equity involvement.
As per the agreement reached between Jet Airways and Kingfisher Airlines, the two carriers would cooperate in eight areas. They are:
1. Code-sharing on both domestic and international flights, subject to DGCA approval.
2. Interline/Special Prorate agreements to leverage the joint network deploying 189 aircraft, offering 927 domestic and 82 international flights daily.
3. Joint fuel management to reduce fuel expenses.
4. Common ground handling of the highest quality.
5. Cross-selling of flight inventories using the common Global Distribution System Platform.
6. Joint network rationalization and synergies.
7. Cross-utilization of crew on similar aircraft types and commonality of training as also of the technical resources, subject to DGCA approval.
8. Reciprocity in Jet Privilege and King Club frequent flier programs.
It consists of forces from the outside stakeholder groups that directly affects the organizations ability to secure resources.
The start of the financial year saw state-run oil companies increase the price of air turbine fuel by 9-10%. And coupled with an increase in fuel surcharge, both Kingfisher and Jet had no option but to pass on this to their customers, through a hike of 10% in tickets. Since then, the regular increase in...