Why Jet wants a second European hub

With European airports wooing Indian business, and Air-India ready to make its move, Jet’s flying towards a win-win deal

MUMBAI: Three international hubs —- that’s what seems to be on Jet Airways’ mind to spearhead its global play.

Of these, its first overseas hub at Brussels in Belgium was unveiled last year.

The airline is currently in advanced stages of negotiation with the Chinese authorities to have a hub at Shanghai for operating flights to the US west coast.

But what came as a surprise to many analysts was the talk about a second hub by none other than Saroj Dutta, executive director, at a recent analyst conference.

Mark D Martin, senior advisor-aviation, KPMG, said the move is understandable.

“Today, airports are competing to attract traffic, especially in Europe. They know that the traffic out of India is set to increase and are aggressively wooing Indian carriers with lower usage charges and facilities such as lounges. Brussels was purely a value proposition for Jet and it has now put them in a position where they can command and negotiate with other airports wooing them.”

Kapil Kaul, CEO, Indian sub-continent and Middle East, Centre for Asia Pacific Aviation, said Jet must be planning from the perspective of catering to traffic from Europe to the US as it would want to be “more aggressive from the source point”.

“Traffic originating from Brussels might not be that high compared with, say, a Munich or Zurich. Brussels currently caters mainly to traffic from origin to destination and there is not much by way of incremental traffic from Brussels,” said Kaul.

With the favourable response for its product, Jet’s US and Canada routes now account for about 29% of the airline’s total international passenger base.

International business tot up about 37% of total revenues for the airline and Jet wants to ratchet the number up to around 50%.

The airline would also want to try and outdo Air India, which plans to set up its first overseas hub in either Munich or Vienna.

Once it finalises a hub, Air India would be in an advantageous position of riding on the vast network offered by other Star Alliance members such as Lufthansa, both in Europe and beyond. Jet wouldn’t want Air India to have such a free reign.

An analyst with a foreign brokerage, who did not wish to be named due to compliance reasons, said: “The intention would also be to serve Europe better. The tie-up with Brussels Airlines could have been more due to political and diplomatic reasons than commercial ones. A hub at a bigger airport in a country like Germany along with a tie up with a bigger regional player would improve Jet’s offering. That said the new hub will not be as big as their operations in Brussels.”

While Paris, Milan and Munich seem to be in the running to be Jet’s hub, CAPA’s Kaul said Zurich might fit in well in Jet’s plans.

“Zurich would be an ideal hub. There is substantial traffic from India to Switzerland and from there onwards to the US. Madrid could be another with a large number of Spanish traffic to cities such as San Francisco.”

n_john@dnaindia.net