Jet aims at $300-mn rise in ancillary revenue

Last Updated: Wed, Aug 08, 2012 05:45 hrs

With profits under pressure, Jet Airways is looking to increase its ancillary revenue by $200-300 million (Rs 1,100-Rs 1,650 crore) and tap business opportunities in loyalty programme management and cabin crew & pilot training.

It earned $170 mn (Rs 935 crore) in ancillary revenue last year. Such revenue typically includes on-board sales, advertising, fees on baggage, etc.

Last week, the Jet management secured shareholders' approval to create a company to manage loyalty programmes and start a crew training academy. Vice-President (investor relations) K G Vishwanath said the loyalty management business would give it a new distribution channel and help increase yields. At present, Jet runs the in-house JetPrivelege frequent flier programme.

The move to push ancillary revenue and unlock brand value by venturing into loyalty management and crew training is part of the airline's drive to shore up revenue. Jet posted a profit of Rs 36 crore for the first quarter of 2012-13, after five consecutive loss-making quarters.

"Today, 85-90 per cent of (miles) accrual happens because of flying," he said. But that ratio will change with the addition of new programme partners, as transactions other than flying will generate miles. All the accruals will start happening towards the partner's side but redemption will happen on Jet Airways' side," he said. "It (JetPrivelege) drives huge loyalty, locks in customers and creates a new distribution channel," Vishwanath added.

Chief Commercial Officer Sudheer Raghavan told Business Standard the airline was evaluating plans to offer commercial pilot training. "It's a distinct possibility. There are external parties who are interested because they see potential in India," he said, responding to a query.

Raghavan estimates the domestic airline market would grow to about 220 million passengers by 2020 and that boom would create a requirement for additional pilots, crew and ground staff. "There is opportunity for us to use the value of Jet Airways' brand and to engage in training of aviation professionals," he added.

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