TATA Sons in pursuit of Jet Airways Deal are weighing up the economic viability of the deal
- Published | 15 November 2018
Tata Sons are in discussion about the Jet Airways deal which will provide them full control of the company’s stake. Buying Jet Airways along with its 124 aircrafts will bring back Tata to the front position of Indian aviation in terms of size.
India: Tata Sons are in discussion about a controlling stake of Jet Airways which is debt-laden, an acquisition which can transform the largest conglomerate of the country from an airline fringe player into a leading, full-service international carrier. Procuring Jet, along with its 124 aircraft, will bring back Tata to the leading position of Indian aviation in terms of size, after almost 70 years of its first airline was nationalized, and after six years it re-entered the market along with two joint ventures.
Conjoining Jet along with its own airline will provide Tata the scale as well as size they naturally operate at in their other businesses. Tata owns varied businesses which range from IT services to car-making. In the aviation industry, it runs the full-service carrier named Vistara along with Singapore Airlines, which started with international flights earlier this year. Tata will most likely combine Vistara with Jet, thus achieving international expansion within split second which would have otherwise taken a long process and time organically. The chief executive of Singapore Airlines Goh Choon Phong told reporters he would not like to comment on "speculation. However, Tata will also be taking on an airline which has reported its quarterly loss for the third time consecutively and owes money to various vendors along with the employees.
According to BlueWeave Consulting, the previous few years have progressively seen airline companies focus on business and premium economy. For example, in 2016, Iberia launched a premium economy offering while American Airlines launched its premium economy cabin in the month of April 2017. Emirates is also launching a premium economy cabin, while Austrian Airlines has already announced their intention to introduce one in 2018. A lot of airlines do not see this as a downgrade for business class passengers anymore but rather as an opportunity to provide the choice of a premium seat on longer duration or international flights for passengers who can’t justify full business fares. There has also been an increasing demand for passenger flights since the tickets are lower in cost and thus larger number of people can avail it. Thus these are the trends that are expected to continue in the foreseeable future. Thus, the acquisition by Tata Sons will help it grow immensely in the aviation market.
According to the upcoming report by BlueWeave Consulting on “Global Aviation Market, By Type, and By Region- Industry Analysis, Size, Share, Growth, Trends & forecast by 2018-2025” There has been a growing demand for passengers or low-cost airlines. Low-cost airlines are basically passenger airlines, who are offering travel service tickets at a comparatively cheaper rate. Low-cost airlines are also known as prizefighters, no-frills airlines, discount airlines, low-cost carriers (LCC), and budget airlines. The viability of the operation of low-cost airlines is credited to its low cost that is increasingly growing the demand for the aviation market. The other reason that is propelling the growth of this industry is the growing premium economy in the airlines.