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Why the Jet-Etihad deal is good news for Indian passengers


Indian fliers may benefit significantly from the deal between Jet Airways and Etihad Airways.

"It's a game-changing opportunity for Etihad, and a game-changing opportunity for India," Kapil Kaul, regional head of the Centre for Asia Pacific Aviation (CAPA), said yesterday after the deal was announced.

More competition: Fast-growing Etihad Airways is taking almost a quarter stake in Jet Airways, giving it a bigger foothold in the fast-growing Indian market. The $379 million investment is the first by an overseas operator in an Indian airline since ownership rules were relaxed, and provides India's largest carrier with a deep-pocketed global partner as well as cash to partly retire debt.

This will encourage more foreign airlines to enter the Indian market. With more players, competition in the sector will increase, and will mean better services and more airlines to choose from.

Lower fares: More players in the airline industry can lead to lower fares as rivals will vie to outdo each other by offering cheaper fares. The intense competition may lead to sporadic fare wars, according to global consulting firm KPMG.

Better regional connectivity: People in Tier 2-3 cities will see better global connect and that may give a fillip to the trade and tourism in those locations, says KPMG. Saroj Datta, former executive director at Jet, said the deal will expand the destination range that the Indian airline can service.

Improved quality of services: With capital infusion and more rivals, airlines may have no choice but to consolidate and improve their service quality, including on time arrival/departure and better in-flight services.

More overseas destinations: As part of the agreement, Jet will establish a hub in Abu Dhabi and expand its reach through Etihad's global network, while the airlines will also expand existing operations and introduce new routes between India and the Gulf.

India airlines may begin offering non-stop flights to destinations like the US, EU, Australia, South Africa, etc., and passengers may prefer non-stop long-haul flights than taking a circuitous and time consuming route through hubs in Middle-East and South-East Asia.

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