January 13, 2017 TnH Global

SpiceJet to buy up to 205 Boeing planes worth Rs 1.5 lakh crore

SpiceJet has struck a deal to buy up to 205 Boeing planes in what is being billed as one of the biggest deals ever in Indian aviation.

Budget airline SpiceJet said on Friday it had agreed to buy up to 205 Boeing planes worth Rs 1.5 lakh crore ($22 billion) in what it said was one of the largest deals ever in Indian aviation.

With the earlier order for 55 planes and additional 100 new 737-8 MAX aircraft, the no-frills carrier now has firmed up order for a total of 155 planes, besides purchase rights for 50 B737-8 MAX and wide body aircraft. SpiceJet chairman Ajay Singh said the low-cost airline was expanding both its domestic and international operations.

“This is the largest deal for SpiceJet, it’s one of the largest in Indian aviation and is the largest for Boeing in India,” he told journalists as he announced the deal.

“We are now in a very good position to expand our network and operations, which includes both domestic and international routes and destinations.”

Singh said the purchase rights include an option to buy wide-body aircraft for long haul journeys as the airline considers launching low-cost flights over long distances. Currently, the budget carrier has 32 next generation B737s and 17 Bombardier Q400s. The deal marks a major turnaround for SpiceJet, whose planes were briefly grounded in 2014 after suppliers refused to refuel them due to unpaid bills.

Analysts say the Indian airline sector has been boosted since then by lower fuel prices and a rise in consumer demand, with domestic traffic up 21 percent last year. “The airline has done really well from being almost on the brink of closure to nearly seven quarters of profit,” said industry analyst Kapil Kaul.

“The new aircraft order is on expected lines and gives them long-term direction. A positive and long-term story is likely to emerge with this order.” The deal is a welcome boost for Boeing in India, where SpiceJet is the US company’s only major customer among the budget carriers now dominating the country’s air industry.

“We are honoured to be the partner of SpiceJet and to be in India in a big way and this is a demonstration of our commitment to our partners and to India,” said Raymond Conner, vice chairman of Boeing. Dinesh Keskar, senior vice president, Asia Pacific & India Sales at Boeing, told reporters in New Delhi that the first planes would be with SpiceJet from next year.

Indian airlines such as the biggest, InterGlobe Aviation’s IndiGo, as well as GoAir and SpiceJet have ordered hundreds of new planes as they rush to win a slice of the boom in demand for air travel. SpiceJet has about 13 percent of the Indian air passenger market, behind market leader IndiGo, Jet Airways and state-run Air India.