Jet eyes stake in UK airline
Mumbai - What does an airline do if it becomes near impossible to get huge slots in a major international hub? If the recent moves made by Jet Airways is anything to go by, then capturing stakes in airlines that have huge slots in major hubs seems to be the ready answer.
Mumbai – What does an airline do if it becomes near impossible to get huge slots in a major international hub? If the recent moves made by Jet Airways is anything to go by, then capturing stakes in airlines that have huge slots in major hubs seems to be the ready answer.
“Sir Michael Bishop owns 51% stake in UK carrier British Midland (BMI). BMI has control over 11% slots in Heathrow and Jet Airways has approached Sir Bishop for controlling stakes in the carrier,” said an aviation consultant.
Jet Airways spokesperson was not available for comments. “In some ways, it’s a repetition of the Air Sahara buyout. We are looking at gaining slots in major airports during peak hours by buying stakes in airlines that are rich in this aspect,” he added.
Before Jet Airways, both Virgin Atlantic and British Airways were reported to be eyeing BMI for a great foothold in Heathrow. “Fleet size and routes are no longer the prime factors that influence a takeover. At a time when major international hubs are choking with capacity, the only way to have a sure foot in the peak hour slot in a major hub is through an airline which has huge slots in it,” he says.
“Control of the world’s key international hubs will be a key driver of structural change in the airline industry in 2008,” says a Centre for Asia Pacific Aviation (CAPA) report. The battle for control of China Eastern Airlines, which in turn means a control over Shanghai airport is a case in point, the report says.
In the US, several lucrative hubs, including Atlanta, Chicago, San Francisco, Washington DC and Detroit are in play as Northwest Airlines, Delta Air Lines and United Airlines consider their merger options keeping the resultant control over hubs in focus.
Commenting on Jet’s interest in Heathrow, a top executive from an airline pointed out that, both for airlines and passengers, the said airport is no longer a hub “to die for”.
“Transiting through Heathrow is a nightmare and it makes sense to look at other emerging European hubs,” he says. Apart from the queues and time-consuming security procedures, Heathrow levies an additional charge of 20 pound per domestic passenger and 40-60 pound per business/first class passenger which inflates the ticket price. “Moreover an international passenger needs a visa to transit through Heathrow, while no other European airports insist on a visa if you have a confirmed ticket,” he says.
Airlines like Air India, for instance are looking at other European airports, like Munich for instance, as a possible hub. Jet Airways currently has the Brussels airport as its hub.
What also remains to be seen is whether Jet Airways would need so many slots in Heathrow. “Slots are controlled through IATA Slot Co-ordination Committee and 80 % of slots will have to be used in immediate period or else it gets surrendered to the slot pool,” said an aviation expert, adding that just having slots isn’t judicious enough, the airline should also have the capacity to utilise them.