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Helping Both Carriers To Significantly Reduce Costs

Kingfisher and Jet form alliance

eTN  Oct 16, 2008

LONDON - Kingfisher Airlines and Jet Airways are pleased to announce an agreement to the formation of an alliance of wide-ranging proportions that will help both carriers to significantly rationalize and reduce costs and provide improved standards of service and a wider choice of air travel options to consumers with immediate effect. The two airlines will be able to rationalize their operations and derive the maximum synergies and thereby offer the best possible fares for the benefit of the consumers. However, there will not be any mutual equity investments between the two companies.

The downturn in the world economy has severely impacted the world aviation industry. The rapid increases in and the volatility of the crude oil prices and that of aviation turbine fuel along with the slowdown in economic activity has resulted in a decline in air travel both on international and domestic segments of the air travel market.

Worldwide, the airline industry has sought to tackle the difficult environment through alliances and joint provision of the best possible standards of service and connectivity to the traveling public by achieving cost and operational synergies and providing extensive connectivity and by offering economical fares. Civil aviation is the keystone of infrastructure development and a key priority of the Indian government for the development of the economy. The proposed alliance between Kingfisher and Jet Airways is in the national interest by incorporating the international best practice to strengthen the Indian aviation industry.

The alliance will also enable a stabilization of the Indian aviation industry in the larger public interest for the benefit of the customer during the current downturn of the world economies.

The Scope of the alliance will include the following areas:

- Code-shares on both domestic and international flights subject to DGCA

- Interline/Special Prorate agreements to leverage the joint network
deploying 189 aircraft offering 927 domestic and 82 International
flights daily.

- Joint fuel management to reduce fuel expenses.

- Common ground handling of the highest quality.

- Cross selling of flight inventories using the common Global
Distribution system platform.

- Joint Network rationalization and synergies.

- Cross utilization of crew on similar aircraft types and commonality of
training as also of the technical resources, subject to DGCA approval.

- Reciprocity in Jet Privilege and King Club frequent flier programs.

In the current environment of high costs and declining growth this alliance has potential for substantial savings resulting in a benefit to the consumer.

Commenting upon this path-breaking alliance, Naresh Goyal, chairman of Jet Airways said, "All over the world, airlines have formed alliances in order to become more efficient, improve revenues and provide seamless travel opportunities for their customers. India has witnessed tremendous growth in the past that has slowed down considerably. In this environment, the Jet Airways - Kingfisher alliance represents a completely new industrial model for aviation in India that would be based on an unprecedented depth of cooperation between the two companies. There will be huge cost savings and revenue enhancement opportunities arising from this alliance."

Dr. Vijay Mallya, chairman, Kingfisher Airlines said, "This is a quantum leap forward in the evolution of Indian aviation which will benefit customers by delivering the most comprehensive integration in the industry. Both Jet and Kingfisher fully realize that better understanding of supply and demand in this capital and labor-intensive industry is the key to profitability and enhancement of shareholder value. I look forward to this alliance delivering superior quality, cost savings, flexibility and enhanced consumer value, which is the hallmark of all successful alliances."

While maintaining their separate legal entities and brand entities, both Kingfisher and Jet will examine co-branding opportunities and have formed a core committee of senior management personnel from both companies who will drive the various identified initiatives forward with immediate effect under the overall direction of Mr. Naresh Goyal and Dr. Vijay Mallya.

Kingfisher and Jet form alliance

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