SpiceJet enters $4.4-bn deal with Boeing to buy 42 aircraft

SpiceJet, an airline part of the Kalanithi Maran-run Sun Group, has ordered 42 Boeing-made 737 Max 8  passenger jets. "It is worth $ 4.4 billion...It is a big deal," is how a visibly happy Dinish A Keskar, senior vice president sales (Asia Pacific and India) for Boeing described it to Business Today.

The deal was announced at India Aviation 2014, an industry event being held at Hyderabad.

The first of the Boeing jets will reach SpiceJet four years from now. "The delivery of these aircraft is going to start from 2018. In this business unless you plan for your fleet well in advance you will be left in the lurch because when you need capacity places are not available," says S L Narayanan, CFO of the Sun Group, which controls SpiceJet.

SpiceJet's 57-plane fleet has 42 Boeing aircraft and 15 Q 400s and some among them will see their lease ending in the years ahead "Our fleet plan provides for growth of about 5 to 6 per cent capacity expansion year on year progressively over the next several years," says Narayanan. On the reason for choosing these aircrafts, he adds, "We have been with Boeing right through and this 189-seater aircraft is a very fuel efficient aircraft. They are also the optimum size for us in terms of meeting our requirements."

On the issues before the airline industry, Narayanan says: "Most of our problems are linked to heavy taxes. Some moderation in taxes will be necessary because the industry is facing extremely tough times. Once the GDP growth picks up the growth there will be good growth in aviation as he says, normally going by empirical data people say that GDP times two is the usual air travel growth. When GDP grows at 8 per cent air travel grows at 15- 16 per cent. Right now the growth has fallen because GDP [growth] has also fallen."

The India Aviation 2014 is a five day event, with the last two days, open to general public to view the aircrafts displayed there. The event is organized by the ministry of Civil Aviation jointly with the Federation of Indian Chamber of Commerce and Industry. The event is being inaugurated by Ajit Singh, Union minister for Civil Aviation.