SpiceJet flies to trigger aircraft acquisition war

NEW DELHI: India’s fourth-largest domestic carrier, SpiceJet is set to trigger a war in the sky as it finalises a Rs 72,000 crore deal for 100 narrow-bodied aircraft with French manufacturer Airbus. The deal will make SpiceJet the first Indian domestic private carrier to have Airbus and Boeing in its fleet. “Right now, we are very focussed on procuring new planes,” SpiceJet CEO Ajay Singh said. Airbus and US-based aircarft aircraft manufacturer Boeing are locked in a battle to supply narrow-bodied planes to SpiceJet and are wooing and offering the airline with aggressive offers.

A government official said SpiceJet had ordered 40 fuel-efficient Boeing 737 MAX aircraft in 2014, which it would be delivered in 2018. “Ordering 100 fuel efficient Boeing 737 MAXs could take time, and it could hamper SpiceJet’s growth plan in India,” said a senior industry official.

While Airbus dominates the domestic short-haul market, which uses narrow-bodied planes, Boeing has dominated the long-haul market in India with wide-bodied passenger aircraft. Airbus commands a two-third market share of aircraft in India. There are 460 narrow- and wide-bodied passenger planes with Indian carriers, and 194 more have been ordered since 2014 (see box).

SpiceJet has a fleet size of 40 aircraft, of which 22 are narrow-bodied Boeing 737-800 and of Bombardiers and turboprops, besides 40 Boeing 737-MAX on order. Indian carriers have largely remained with either Airbus or Boeing for narrow- and wide-bodied aircraft, with state-owned Air India as an only exception to have aircraft manufactured by both manufacturers.

Airlines benefit by having a fleet of single manufacturer as they have to engage fewer pilots and engineers. Boeing, Airbus or any other aircraft require a different team, which increases an airline’s operational costs. Some of the newer Indian airlines—such as IndiGo—have chosen to buy a single type from a single manufacturer. IndiGo, with a fleet size of 119 aircraft, has all narrow-bodied Airbus, while Jet Airways has largely Boeing, with a few Airbus as well.

GoAir has only Airbus planes. In 2015, IndiGo ordered 250 Airbus A320neo planes, Jet Airways ordered 75 Boeing 737 Max planes and Vistara ordered seven Airbus 320neo planes. In 2014, SpiceJet ordered 40 Boeing 737 MAX planes and Air Costa ordered 50 Embraer E-2 jets. In July 2016, GoAir ordered 72 Airbus A320neo. IndiGo, Jet Airways, Air India, Air Asia and other airlines also have deliveries lined up for orders placed between 2011 and 2013, which are adding to their fleet in phases and will be delivered by 2020.