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Monday, December 4, 2017

Jet airways enter into grand marriage with Air France and KLM

C Shivakumar @ Mumbai:
Jet Airways entered into a metal neutrality pact with Air France and Dutch Airlines for further strengthening operations between India and Europe and predicted the grand alliance would enable an addition of USD one billion in the revenue of alliance partners.

Terming the agreement as 'Marriage Without Dowry', Jet Airways Chairman Naresh Goyal said that the agreement is not a joint venture but is beyond the Codeshare agreement signed with the airlines.

Interestingly, under metal neutrality airlines “become effectively indifferent to which plane or ‘metal’ carries a passenger. This form of cooperation is a close substitute to a merger because it typically involves full coordination of the major airline functions on the affected routes, including scheduling, pricing, revenue management, marketing and sales.

Jean-Marc Janaillac, Chairman and chief executive officer of Air France-KLM and Pieter J Th. Elbers said that the agreement will offer Indians 500 destinations on a same day from any city of India to any city in US and Europe.

It is learnt that the alliance is looking at 40 per cent increase in passenger load factor from India and Europe. The alliance has a share of 1.2 million passengers and the goal is to increase it to 1.7 million passengers.

Goyal clarified that the pact will not have any impact with its alliance with Ethihad Airways. "They are members in our board and have given consent to the deal," said Goyal. The deal with Ethihad will not be disturbed.
interestingly, this is the first time a Indian based private airline has entered into metal neutrality pact which is common in North Atlantic.
The alliance comes at a time when Air France is celebrating its 70th anniversary and Jet Airways it's 25th anniversary.

What is metal neutrality:

Metal Neutrality is more than code-sharing an less than a merger. It’s generally used in the context of international service.

Ailines enter metal neutrality pact as most of the time, air carriers cannot merge across international lines, due to international agreements and those countries’ own regulations.
Metal Neutrality is a seamless integration between airlines that is legal on paper but of questionable legality in spirit. In effect, the airlines would be so integrated that it wouldn’t matter who owns the “metal” (airplane) that actually operates the flight.

The advantage of this is that it should be more cost-efficient. The disadvantage is that it can eliminate competition, potentially even creating a monopoly in certain markets.

How the agreement will benefit passengers:
A first in the history of Indian aviation, this agreement strengthens the partnership built between the three airlines since 2014.
----  The enhanced cooperation agreement will see Jet Airways, Air France, and KLM working together to develop their commercial and product offering.
---- Customers will thus benefit from multiple travel options and seamless service throughout the three partners’ networks spanning 44 cities in India and 106 destinations across Europe.
---- This agreement will strengthen the enhanced offer for customers travelling between India, Europe and North America in the following ways  Offer an extended network and increased capacity between Paris, Amsterdam and India.
------Improve connecting opportunities through adapted flight times via Paris-Charles de Gaulle, Amsterdam-Schiphol as well as Mumbai, Delhi, Bengaluru and Chennai.
--- Offer guests, a seamless travel experience between the networks of Jet Airways, Air France and KLM.
---- Benefits of the Flying Blue and JetPrivilege loyalty programmes on the three airlines’ networks worldwide.
---- Coordination of sales and services to provide the best possible offer for customers

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