Jet Airways targets $100 million non-ticket revenue in FY13

In an attempt to raise its non-ticket revenue, private carrier Jet Airways is seeking shareholders’ nod to set up a marketing services company and a training academy. A senior airline official told NDTV that Jet Airways is targeting to have at least $100 million non-ticket revenue this financial year itself.

When contacted, Jet Airways vice-president, marketing, Manish Dureja said: “All I can say is that we are going to unbundle the services offered where the passenger will choose the services he/she wants to pay for. These services could include meals, miles, baggage, etc.” Non-ticket or ancillary revenue is currently at just 3 per cent of the total revenue at about Rs 121 crore, but the airline believes the potential is huge.

Centre for Aviation South Asia CEO Kapil Kaul says: “Jet Airways can achieve $100 million in ancillary revenue this year or even more if it has an organization to leverage this opportunity. To get the operations in place, six months are enough, and so in 12 to 18 months it can gear up its operations and marketing to boost its non-ticket revenues.”

Globally, ancillary revenue for airlines stands at $33.5 billion, even though in India it is still small. CAPA is also preparing a report on the ancillary revenue opportunity for airlines in India, which is expected to be published in two months.

Some of the steps Jet Airways is taking in that direction include setting up two fully-owned subsidiaries—one a marketing services company and another firm for a training academy. The marketing services company will be engaged in the business of managing reward points and loyalty programmes for its partners.

Seeking shareholders’ approval, Jet Airways said: “The JetPrivilege programme is managed and operated in-house. Your company proposes to transfer the JetPrivilege programme to the marketing services company and in the process transform the JetPrivilege programme into a larger retail-based coalition loyalty programme, and through its operations unlock greater commercial value.

Meanwhile, Jet Airways has also concluded an agreement and will soon launch co-branded credit and debit cards with HDFC Bank. Jet Airways is also finalizing co-brand partnerships with American Express and ICICI Bank. In May, Citibank had announced that it was ending its 12-year pact with Jet Airways, but the airline has already found new partners.

Airlines have been looking at all kinds of revenue opportunities to get funds as investors have been unwilling to take exposure to the Indian aviation sector. In its communication to the shareholders, Jet Airways management explained why the company was seeking an enabling resolution to raise $400 million through equity yet again as the special resolution was passed in its annual general meeting last year as well.

Jet Airways said: “Due to the unfavourable and uncertain market conditions, this proposal could not be implemented. The intention of the company to raise capital still holds good, and therefore it is proposed to approach the potential investors as and when there is an improvement in the situation.” The special resolution passed last year will expire on August 16. The company’s annual general meeting this year is scheduled on August 3 in Mumbai.