Kingfisher and Jet Airways [Get Quote], the two private carriers that announced a cost-saving alliance on Monday, will send back 15 narrow-bodied aircraft to the leasing companies after their leases end later this year and in 2009.

The combine has a fleet of 189 aircraft which includes A-320s, A-330s, Boeing-737s, Boeing-747s and turbo props.

Industry experts said this would mean the withdrawal of around 75 flights a day, or around 8 per cent of the combine's daily domestic flights.

Confirming this, a senior Kingfisher executive told Business Standard that eight of these aircraft would be from Kingfisher-Deccan and the rest from Jet-Jet Lite.

The combine will not be returning wide-bodied aircraft, which ply the international routes, he added.

Kingfisher has already sold two of its five wide-bodied Airbus A340s to Nigeria's Arik Air and has deferred deliveries of 32 narrow-bodied A320 aircraft.

In the current Kingfisher fleet, 2 ATRs (70-seater turbo prop aircraft) and three of the recently delivered wide-bodied Airbus A330s are lying unused following a route rationalisation exercise.

The Kingfisher executive also said co-branding options were being worked out, under which airport vehicles (but not aircraft) might sport both Kingfisher and Jet logos.

Talking to reporters today at the Hyderabad aviation show, Jet Airways promoter Naresh Goyal and Kingfisher Chairman Vijay Mallya said the alliance would save them Rs 1,500 crore (Rs 15 billion) and the benefits of the alliance would kick in from the next quarter.

Goyal added that the alliance was inevitable.

"There is a 30 per cent overcapacity in the industry and every airline is still selling below cost. We have instances of international airlines dumping aircraft and filing for bankruptcy but we do not have any Chapter 11 in India," said Goyal.

"We are getting average load factors of 60 to 67 per cent against breakeven load factors of around 90 per cent. If Jet and Kingfisher have flights within half an hour, we can combine the two flights and then get loads of around 80 per cent," he added.

Industry experts said the alliance would certainly help cut in excess capacity.

"I see an immediate 10 per cent decrease in excess capacity as a result of this alliance," said Kapil Kaul, CEO (Indian sub-continent), Centre for Asia Pacific Aviation.

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