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Wendy is an IFE Agent responsible for aggregating airline news specifically related to Inflight entertainment. She compiles stories relevant to business travelers, airline industry folks, marketers and tech geeks. IFE News doesn't create original content, but rather posts compelling editorial from global media outlets.

Etihad Adds New Wind Beneath Jet’s Wings

Etihad Adds New Wind Beneath Jet’s Wings

The combination of Abu Dhabi’s flag carrier and one of India’s largest airlines by market share will shake up India’s domestic aviation sector—and the outbound Indian air travel market, too.

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Reuters

A Jet Airways passenger plane moves along the tarmac at the Sardar Vallabhbhai Patel international airport in the western Indian city of Ahmedabad, Apr. 24.

Etihad Airways last week agreed to pay $380 million for a 24% stake in Jet Airways 532617.BY +2.05% . The deal is the first since New Delhi opened up the industry to more foreign investment in September. It should help Jet pay down part of its $2.16 billion in borrowings, Citigroup C -0.08% says. For Etihad, the appeal is clear: The International Air Transport Association estimates passenger traffic within India will grow the second-fastest in the world between now and 2016. Only Kazakhstan’s market is expected to grow faster.

Changes in the outbound travel sector could be at least as significant. India’s government last week agreed to let carriers fly nearly 40,000 more seats per week between India and Abu Dhabi. That is roughly three times the current limit, and brings the cap to nearly 50,000, much closer to the quota for Dubai of 55,000 seats a week.

Among the losers could be Dubai-based Emirates, which has had a dominant position on routes to the Gulf and on to Europe or North America. Emirates ferried 13% of India’s international passengers in the year ended March 31, 2012. The additional quota for Abu Dhabi should mean Etihad and Jet provide more intense competition to Emirates on international routes.

India’s big privately-owned airports could suffer, too. Currently, Indians wanting to fly overseas mostly travel via Mumbai or New Delhi. But Jet has applied for approval to connect 23 more Indian cities to Abu Dhabi. If the regulator approves that plan, Abu Dhabi could be a major threat to Indian hub airports.

The big winners from India’s more liberal aviation-sector rules are India’s air travellers. More competition could hurt profits for some airlines and airport operators. But more flights and alternative routes should mean lower fares for passengers.

—Abheek Bhattacharya

 

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