Govt clears $5-bn airplane purchases

Boeing bags bulk of aircraft sought by LCCs

The government has cleared the acquisition of 46 new aircraft worth over Rs 19,000 crore by three low-cost carriers: SpiceJet, IndiGo and Jet Lite. The new planes will arrive in a staggered delivery schedule beginning November. The acquisitions were cleared on August 30 at a meeting of a civil aviation ministry empowered committee.      

US manufacturer Boeing bagged the larger part of the clearances — 32 planes — while 14 went to European rival Airbus. The Centre’s green signal for the aircraft comes just two months before the scheduled arrival of US President Barack Obama on a state visit to India in November.

FLYING HIGH
Airline	Approvals

Curr fleet SpiceJet30B737-80021 IndiGo14A-32027 JetLite2B737-80023

The large number of planes to be acquired by the low-cost airlines reflects their growing clout. Together, these carriers account for half of all passengers flown in India. It also signals a revival in the airline industry, which has been reeling under a slowdown. Airlines expect the domestic market to grow by over 20 per cent this year.

The permission to acquire new aircraft comes around six months after the government gave in-principle clearance to IndiGo to buy 150 new aircraft. The cost was estimated at around Rs 65,000 crore.

Gurgaon-based SpiceJet received approval for 30 Boeing 737-800s at a cost of $2.7 billion (Rs 12,660 crore). Delivery is to start from 2014. SpiceJet operates a fleet of 21 aircraft and will induct seven more in the current calendar year. It plans to operate 50 aircraft by 2014.

IndiGo, which is the country’s largest low-cost carrier by market share, received approval for 14 A-320s for 2011-12. The Gurgaon-based carrier, which operates a fleet of 27 aircraft and has a market share of 16.9 per cent, is adding seven new planes this financial year. IndiGo ordered 100 Airbus 320 aircraft in 2005 for delivery by 2015-16.

The third airline JetLite, a wholly-owned subsidiary of Jet Airways, has been granted permission to buy two Boeing 737-800s in November. JetLite operates a fleet of 23 aircraft and has a marketshare of 7.5 per cent.

Both SpiceJet and IndiGo are also firming up plans to go international. Having completed five years of domestic operations — a pre-requisite before seeking a nod to fly overseas — SpiceJet plans to launch foreign routes this month.

Among its international destinations will be Male, Colombo, Dhaka and Kathmandu.  IndiGo, however, will have to wait until it completes five years of domestic operations next year. It hopes to fly to Singapore, Bangkok, Kuala Lumpur and Dubai.

The low-cost boom in the country has forced full-service carriers Kingfisher Airlines and Jet Airways to start budget subsidiaries. They have shifted 65-70 per cent of their total seat inventory to their low-cost operations (JetLite, Jet Konnect and Kingfisher Red). Government-owned Air India is also looking at launching low-cost operations in the domestic sector.

These additions in capacity are set to take the number of low-cost seats on the domestic network to 80 per cent of the total 115,000 a day.