Etihad Airways advances with Indian expansion

The airline has added flights and seating capacity to Mumbai and New Delhi.

Etihad in April announced the agreement to acquire a 24 per cent stake in Jet Airways for $379 million. Adnan Abidi / Reuters
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MUMBAI // Etihad Airways has moved forward with an aggressive expansion programme for its Indian operations after buying a stake in Jet Airways as part of a US$600 million deal.

Etihad has doubled the number of flights and tripled the number of seats between Abu Dhabi and Mumbai and New Delhi, adding a second daily service and wide-bodied Airbus planes on both routes, the airline said.

“India is one of the world’s largest and fastest-growing air travel markets, and will play an increasingly important role in our growth,” said James Hogan, the president and chief executive of Etihad.

The airline added that it planned to codeshare on new Jet Airways flights between India and the US, flying via Abu Dhabi, as well as codesharing on each other’s flights to other markets internationally, subject to regulatory approval

“Central to the Etihad Airways plan is the use of Abu Dhabi as a global hub connecting international passengers and freight with flights to and from India,” Etihad said.

Saj Ahmad, the chief analyst at StrategicAero Research, said that the move would help Etihad to tap a vast market, but pointed out that the operating environment in India was challenging.

“Doubling frequencies will mean more choice and better fares for passengers but not necessarily translate into profit,” said Mr Ahmad. “We’ve seen a litany of Indian airlines struggle.”

High taxes and fuel prices have resulted in major losses for Indian airlines. Jet Airways in October posted a record quaterly loss of 8.91 billion rupees (Dh535.5 million) for the months between July and September.

Etihad in April announced the agreement to acquire a 24 per cent stake in Jet Airways for $379m. It pledged to invest a further $150m in Jet’s frequent flyer programme and $70m to buy Jet’s six landing slots at London’s Heathrow Airport through a sale-and-leaseback agreement.

The deal was repeatedly delayed, however, as the airlines awaited regulatory clearances in India. Under the deal, Etihad had become the first foreign carrier to buy a stake in an Indian airline after the Indian government last year permitted investment of up to 49 per cent in the country’s carriers for the first time.

The agreement cleared the final hurdle of securing the approval of the Cabinet Commission of India last month.

The Indian government this year approved an increase in the seat capacity between Abu Dhabi and India to 50,000 a week by 2015 from 13,300 a week.

Etihad has said that its additional capacity will benefit both India's and Abu Dhabi's economies.

Etihad also revealed yesterday that its cargo division moved a record 49,700 tonnes of freight last month, up 52 per cent on the same period last year.

Etihad Cargo has had a record year to date, the airline said, with the performance “driven largely by stronger performance into and out of some of our larger markets including China and India, as well as expanding markets such as the Netherlands and the United States”.