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Page last updated at 09:39 GMT, Tuesday, 14 October 2008 10:39 UK

Indian airlines agree on alliance

Chief Executive Officer of India"s Kingfisher Airlines Vijay Mallya (L) and Chairman of India"s Jet Airways Chairman Naresh Goyal address media representatives after a meeting in Mumbai late October 13, 2008.
Mr Mallya (left) and Mr Goyal need to save money

India's two largest private airlines, Jet Airways and Kingfisher Airlines, have agreed an alliance to cut costs.

The deal will include route sharing and the joint use of crews.

The two airlines have nearly 60% of the market in India. They said the rise of jet fuel by a quarter this year was a major factor in wanting to join forces.

The move follows earlier consolidation in India's aviation sector, where there is intense competition as more people become able to afford plane travel.

'Benefits'

The chairman of Kingfisher Airlines, Vijay Mallya, said the alliance with Jet would bring benefits to both partners.

"We both recognise the economic realities and the opportunities going forward. We both are aware of the benefits that the alliance will bring, and let me tell you that it is both the meeting of mind and heart."

The two airlines, which have a combined fleet of 189 aircraft, say there was a 33% increase in passenger numbers last year, but growth this year has slowed to 7.5%.

"There will be huge cost savings and revenue enhancement opportunities arising from this alliance," Jet Airways chairman Naresh Goyal said.

In recent years, more than a dozen private airlines have sprung up in India.

Last year Kingfisher merged with another rival airline, Deccan, and Jet, the country's largest domestic carrier, bought Air Sahara.


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