Analysis: Jet Airways to withdraw from Bhubaneswar

According to several reports, Mumbai-based full service carrier Jet Airways is planning on pulling out from Bhubaneswar from the Winter 2013/14 season. Inventory has been zeroed out from 27th October onwards and flights to and from Bhubaneswar are no longer bookable on jetairways.com. Additionally, sources are saying that Jet Airways has not requested slots at Bhubaneswar for this winter, though we will have to wait for the release of route information onto the Global Distribution System (GDS) to confirm this news.

During August, Jet Airways has operated three flights per day to Bhubaneswar, daily Chennai-Bangalore-Bhubaneswar and return, daily Mumbai-Bhubaneswar and return, and daily Kolkata-Bhubaneswar and return. Mumbai-Bhubaneswar and Kolkata-Bhubaneswar are served with JetKonnect Boeing 737-800 equipment, while Bangalore-Bhubaneswar is served with full service 737-800 equipment. The current service level actually marks a reduction from planned levels at the start of the summer, as an additional two flights per day to Kolkata were initially filed with the Directorate General of Civil Aviation (DGCA) utilizing ATR 72-500 turboprop equipment.

If true, the cancellation of Bhubaneswar is a poor step on the part of Jet Airways. One of the few strengths remaining for the financially struggling Jet Airways is its powerful domestic network, with 49 domestic destinations. Bhubaneswar is the 18th busiest airport in India, and one of the most important destinations in Eastern India. However, Jet Airways has been facing challenges thanks to the steady growth of low cost carrier (LCC) IndiGo in the Bhubaneswar market. IndiGo is the largest carrier in the Bhubaneswar market, with nine flights per day this summer to five nonstop destinations; Delhi, Hyderabad, Kolkata, Mumbai, and Vizag.

Even with the increased LCC competition, it does not make sense that Jet did not at least keep around Mumbai-Bhubaneswar for feed purposes. With the new Mumbai integrated terminal arriving by the end of next year, Jet Airways has the opportunity to build a strong regional hub at Mumbai connecting passengers domestic to international and vice-versa. Since Mumbai-Bhubaneswar is served with JetKonnect equipment, with lower operating costs, it is likely losing the least money of Jet’s Bhubaneswar services, and thus it would have made sense for Jet to keep Bhubaneswar around.

But the cancellation is just the latest a growing pattern of poor network decisions made by Jet Airways over the past few years. It is certainly possible for airlines to cut services on their way to profitability; but that usually applies to redundant or heavily money-losing capacity that does not serve a strategic purpose (Delhi-Milan being one rare example at Jet Airways); not a key short haul destination.