In order to raise funds, full-service carrier Jet Airways has decided to sublease out its fleet of ATR planes to regional carrier TrueJet.
The deal, which is taking a final shape, could be announced in two months, said people aware of the development. Jet has 15 ATR 72-500s and three ATR 72-600s which are leased from foreign lessors.
The deal may see Jet Airways leasing out the planes in a phased manner, starting with six planes in the first phase.
The move is likely to help the company earn money at a time when it is looking for funds for its fleet induction and expansion plans. The airline appointed J P Morgan to help raise funds. Jet’s management has been in talks with Delta for a stake sale. Simultaneously, its founder chairman Naresh Goyal is talking to Etihad, too, for capital infusion. Etihad holds 24 per cent stake in Jet Airways. A Jet Airways spokesperson declined to comment.
TrueJet, which is registered as Turbo Megha Airways, aggressively participated in the first round of bidding of Regional Connectivity Scheme (RCS) and won the right to operate nine routes. The airline has already started flying in three of these routes — Hyderabad-Kadapa, Hyderabad-Nanded and Nanded-Mumbai. A TrueJet executive confirmed that the airline is in discussion to lease the planes from Jet Airways.
“The talks are for dry leases of planes in a phased manner,” he said.
For TrueJet, it will give a boost to their fleet and destination expansion plans. The airline, which has five ATRs at present, plans to induct about five planes this year to grow its network.
Currently, it operates 28 flights daily to 10 destinations, including the RCS routes. According to plans submitted to the Directorate General of Civil Aviation (DGCA), the airline wants to expand operations to cities in western India like Vadodara, Ahmedabad and Nagpur. Two other airlines, which will operate under RCS — Air Odisha and Air Deccan — are in talks to induct Beechcraft 1900D aircraft.
It had been reported earlier that Jet Airways was planning to phase out its ATR fleet. Officials say that the airline felt, given a larger focus on international routes, ATRs did not fit in the present scheme of things. Add to that, a scarcity of pilots to fly smaller planes and high maintenance costs. At present, expat pilots operate most ATRs for the airline, which leads to higher costs. For an airline, the cost of an expat pilot is at least four times that of an Indian pilot.
“ATRs no more suit our strategy. Their maintenance costs are higher, getting pilots for them is difficult, and for the management, it was becoming too difficult as the network strategy of operating an ATR is very different from that of a Boeing 737 or Airbus A330,” a person aware of the development said.