“Generally, aircraft deals of this scale and size are announced at an international airshow as is the norm internationally,” a person familiar with the negotiations said, while declining to be named.
Even as reports emerged of the IndiGo board ratifying the humongous deal shortly, those in the know said the final order may comprise a fair mix of narrow-body aircraft such as Airbus320neo and A220-500, which is rumoured to be unveiled at the airshow, and wide-body ones.
The deal, once announced, will take the number of IndiGo’s outstanding orders to a staggering 900 aircraft.
“This may appear to be quite a lot, however, more than half of the proposed orders will be utilised towards replacing older aircraft. Usually, IndiGo doesn’t keep an aircraft for more than 11 years. If you do the math, you will notice that the aircraft that came in 2006 (the year the airline launched operations), were replaced by 2017,” pointed out a second person familiar with the deal.
Hence, the deliveries may not start before 2025.
If announced at the 54th edition of the Paris Air Show, which began on Monday, this record order would come within five months of the former national flag carrier Air India inking a mega deal for 470 aircraft with Airbus and Boeing in February.
The sweetest deal
Besides, the low-cost carrier is reported to have once again hammered out one of the sweetest deals in global aviation for its newest aircraft order.
“It [IndiGo] has drafted one of the best contracts and they are likely to go in for CFM engines for the new orders,” a third source told BT.
And a mega order of this size comes with a lot of favourable conditions built into the contract for the buyer.
“When you have an order for more than 100 aircraft, you have a lot of flexibility in negotiating the terms such the discount, aircraft type and delivery dates, where you can possibly postpone or advance them,” the source cited at the beginning of the story said.
Amid speculation on the overall deal size in other media resources, sources quoted here refused to put a sticker price on it, claiming the carrier may have ultimately obtained a steep discount of up to 55 per cent!
Entry of the A220 family?
The deal may also see IndiGo placing an order for the A220 family of aircraft. In eight years since it was first commercially inducted, the A220 family of narrow-body aircraft has emerged as even more efficient than A320neo.
Firstly, the aircraft is just the right size with a seating capacity of 170 passengers. Secondly, after aggressively expanding through tier-I cities, IndiGo is now looking at organic growth by ramping up flights to tier-II and III cities such as Shivamogga, Pantnagar and Bareily as well as enhancing international flights to destinations in countries of the Commonwealth of Independent States (CIS), Africa and South and Southeast Asia.
But there is a catch here.
“Currently, the A220 family comes with an option for only P&W engines, which is why Airbus has indicated that it may like to have the option for a second engine maker such as CFM,” said the third source, adding, “Therefore, IndiGo may ultimately go for up to 100 options instead of firm orders at this stage.”
Evolution into a hybrid carrier
Sources also added that this order would mark IndiGo’s transition from being a majorly domestic LCC to a global airline system operating with a hybrid model.
“Companies such as Canada’s WestJet and Brazil’s Azul Azul Linhas Aéreas Brasileiras had similarly started out as LCCs. However, once they realised that they needed to expand internationally to sustain future growth, they turned hybrid as well as acquired widebodies. IndiGo’s story is similar,” said the second source cited earlier.
The question that remains to be answered is which aircraft IndiGo might opt for widebody operations. The carrier currently operates a fleet of B777 on a wet lease from Turkish Airlines.
“Having used this arrangement with Turkish Airlines to carefully gauge the international market since February, IndiGo would have structured its widebody order accordingly,” an aviation expert stated requesting anonymity.
Meanwhile, market sources remained non-committal on the aircraft type or order size for widebodies.
“If I were you, what I would patiently wait out to see whether the widebodies are Airbus 330-900 or Boeing 787s,” the third source declared with a chuckle.
They were, however, of the view that irrespective of the OEM, a potential order for wide-body planes is not likely to exceed 50 at this stage.
BT’s request for comment from IndiGo remained unanswered at the time of the story being published.