Etihad Airways Chief Executive James Hogan, right, speaks as Naresh Goyal, Chairman of India's leading private sector airline, Jet Airways, looks on at a press conference in Mumbai on June 10, 2008. Etihad had just announced a $379 million deal to buy a 24 percent stake in Jet Airways.
      Jet was in tough financial straights. Now in 2016 it’s a bit better with Etihad holding 49 percent of Jet business, but a rift between Hogan and Goyal is reported.
      Is all not well with the Jet Airways-Etihad marriage?
      Recent signs indicate that things are not as good as they should be and that there could be continued storm clouds on the horizon. After all, the partnership ushered in profits for the Naresh Goyal-led Jet Airways: in the first quarter of 2016-17, Jet’s operating profit shot up by 124 percent to $33 million. Profits led Jet Chairman Goyal to comment in August this year:
      “Jet Airways has strengthened its core operations and achieved better capacity utilization and greater efficiency.
      “We have been able to report lower non-fuel costs in spite of inflationary increases and the almost 6 percent weakening of the Indian rupee against the U.S. dollar.”

Code Share Reported Strong

      Goyal emphasized that the strategic partnership with Etihad continued to be strong.
      Code-share traffic delivered by Etihad and its other partner airlines to Jet had grown by 41 percent, while revenue from the Etihad alliance was up by 38 percent.
      James Hogan, Vice Chairman of Jet Airways and Chief Executive of the Etihad Aviation Group, joined Goyal to say “we will continue to strengthen the partnership between Jet and Etihad by driving further synergies, along with other partner airlines.
      “In a competitive market, we have together created a winning combination of a wider combined network and exceptional guest experience for travellers to and from India.
      “Together, we (Etihad and Jet) are the largest combined scheduled operator of flights to and from India with a 20 percent market share.
      “Our robust partnership continues to go from strength to strength,” Hogan said.

Executive Shuffle

      However, elsewhere India aviation industry watchers point out that notwithstanding the profits and Naresh Goyal’s emphasis on the strategic partnership, a number of top executives placed by Etihad in Jet have moved out en-masse during 2016.
      While James Hogan and James Rigney, Etihad Chief Financial Officer, continue to be members of the Jet Airways board, Cramer Ball, who had been appointed CEO, was the first to go.
      Ball was followed by Martin Drew, Vice President, Cargo (his position has been filled up by Pradeep Kumar, formerly with Emirates); Rajeev Nambiar, VP, Sales; Renyl Rauf, VP, Financial Planning, Reporting and Projects; and Business Advisers Roy Kinnear and Rangesh Embar.
      A source said “it is quite apparent now” that Naresh Goyal has started calling the shots in Jet.
      “The carrier’s management is now handled totally by three of his most trusted aides: CFO and acting CEO Amit Agarwal, Chief Commercial Officer Jayaraj Shanmugam, and Wholetime Director Gaurang Shetty.
      “In fact, it is Shetty who is doing all the commercial and global deals.”

What Problems?

      For their part, Etihad has denied any rift with Jet.
      An Etihad spokesperson told Khaleej Times that “reports circulating about the relationship between Etihad Airways and Jet Airways are absolutely unfounded and baseless.”
      A joint statement from both carriers seemed to back that up, stating:
      “Both airlines continue to enjoy a strong, healthy relationship since the forging of the partnership three years ago.
      “Anything to the contrary is completely false, and reports of such are misguided and misinformed.”

Looking Ahead

      Analysts and industry watchers apparently see something else.
      Mark Martin of Martin Consulting LLC, for example, was quoted saying that what “Goyal has done is systematically de-centralize Etihad’s bit of the whole control over the combine and brought it to himself.” Speaking to a business daily, Martin also said that Goyal was the “CEO of the company for all practical purposes.
      “Which is why, apart from the reshuffles in management, you have seen a new marketing campaign, a new pricing strategy, a new loyalty program and of course new global, commercial alliances being formed.”

Timing Was Right

      The Jet-Etihad partnership took place at the right time.
      Jet was in dire financial straits and Etihad was looking to enter the Indian market in the face of the competition posed by Emirates and Qatar.
      So, while the tie-up worked on one level, on another there were apparently differences of opinion between Hogan and Goyal.
      The first signs that Jet wanted to move away from Etihad came when Goyal tied up with KLM and Delta and shifted his European base from Brussels to Amsterdam.
      The move, according to insiders, found few takers at Etihad, which wanted Jet to set up a base at Dusseldorf, AirBerlin, one of Etihad’s partner hubs.
      For the moment, however, even though reports indicate that Naresh Goyal wants to travel on his own path, he cannot afford to do so.
      Around the middle of February this year, Etihad decided to raise its stakes in Jet Airways from 24 percent to 49 percent.
      In fact, since India opened the doors for foreign carriers to invest up to 49 percent in aviation, the move would not require the approval of the Foreign Investment Promotion Board.
      The future of the partnership will be eagerly watched.
Tirthankar Ghosh