Kingfisher Airlines chairman Vijay Mallya and Naresh Goyal of Jet Airways at an aviation exhibition in Hyderabad on Wednesday. (PTI)

New Delhi, Oct. 15: The cost-cutting alliance between India’s largest private-sector carriers — Jet Airways and Kingfisher Airlines — will lead to an increase in air fares and a cutback in flights on various routes, said industry experts.

Vijay Mallya and Naresh Goyal — the chairmen of Kingfisher Airlines and Jet Airways, respectively — have said the “cost saved through the alliance will be passed on to the consumer”. But no one believes that ticket prices will come down. Industry experts said the dynamics of demand and supply would lead to an increase in fares.

“With rationalisation, the number of flights will come down. But demand will remain the same, leading to the rise in fares. Passengers will have no option but to fork out more,” said Subhash Goyal, the chairman of Stic Travel.

The Jet-Kingfisher alliance involves joint fuel management, ground handling, network rationalisation and crew sharing.

“We do not see a major cut in costs. The ground crew staff as a portion of total airline staff is minuscule,” said a senior aviation analyst.

He added that reduction of maintenance costs would be “minimal” as Jet had a largely Boeing fleet while Kingfisher had an Airbus fleet.

The aviation ministry is also keeping a close watch to determine whether the alliance is monopolistic in nature. Although the two airlines have said they are not forming a cartel, a senior official said: “We are waiting for the airlines to give us details of this alliance in writing.”

However, some experts said the alliance would mean better connectivity for passengers in terms of code sharing — a practice where a flight operated by an airline is jointly marketed as a flight for one or more other airlines — and the facility to burn frequent flier miles on each other’s flights.

Kapil Kaul, India region head of the Centre for Asia-Pacific Aviation, said the alliance would also help the industry to stabilise.

The outlook for India’s airlines has been poor because of sluggish growth in passenger traffic and lack of clarity on when airlines would become profitable.

Airlines have expanded rapidly over the past few years with the number of passengers growing by an annual average of 20-25 per cent. But higher oil prices and the depreciating rupee have forced carriers to raise fares sharply, sending many travellers back to the railways.

While passenger numbers rose 7.5 per cent in the first half of the year, they have fallen since and the load factor for many carriers is now below 50 per cent.