ETIHAD Airways of the UAE has taken a 24 per cent minority stake in India’s Jet Airways for $379 million under a strategic deal.
The Abu Dhabi-based airline, which is on an aggressive expansion drive, will also make a $150 million equity investment in Jet’s frequent flyer programme and spend $70 million to buy Jet’s three pairs of Heathrow slots through the sale and leaseback agreement announced in February.
Under the deal, the airlines will expand operations and introduce new routes between India and Abu Dhabi. They will combine their network of 140 destinations, with Jet Airways establishing a Gulf gateway in Abu Dhabi and expanding its reach through Etihad Airways’ global network. New flights from Jet Airways’ home hubs and metro airports will further strengthen its current operations from these airports. Jet Airways’ vision continues to be to develop Delhi and Mumbai airports as its primary home hubs and connecting them to Asian, European and other regions.
Details of the investment were unveiled by Etihad Airways president and chief executive officer James Hogan, and the chairman of Jet Airways, Naresh Goyal.
Hogan said: “We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines. It is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years.”
A key component of the partnership is expanded code sharing on flights.
The code-share expansion will enable Etihad Airways to tap into India’s rapidly growing travel market, providing additional passenger traffic to Etihad Airways’ Middle Eastern, North American and European destinations, and give Jet Airways passengers from various cities access to an expanded network.
Other areas of co-operation include joint training of pilots, cabin crew and engineers, as well as maintenance of common aircraft types and the consolidation of guest loyalty programmes.