Indian Carrier to Acquire More Planes

Monday, 17th June 2013 at 05:56am

Indian carriers are already seeing a much stiffer competition ahead as new entrant has eased its way into the local market recently.

In an effort to cushion itself from the impact, Jet Airways is planning to increase its fleet by acquiring more planes such as the narrow-body Boeing 737s. The airline's Vice President of Commercial Strategy, K.G. Vishwanath, disclosed in a recent press conference that aircraft acquisition is already in the pipeline, though he didn't divulge any details as to the number of planes and the date the purchase will commence.

Recently, it had struck a deal with Abu Dhabi-based Etihad Airways allowing the Gulf carrier to purchase a 24% stake of its shares. The deal will also boost its seat capacity in the local market by as much as eight percent annually with the delivery of 46 more aircraft in the next three years.

According to industry estimates, passenger traffic in India will grow three-fold by 2021 from its current figure to 180 million.

Industry analysts said that Jet definitely needs more aircraft to keep its market share and with Etihad as its partner, Jet, for sure, is capable of doing it.

Based on industry forecast, Indian carriers need 1,450 aircraft with a cumulative price tag of $175 billion in the next two decades. It was also projected that, by 2016, India will become the second fastest growing aviation market next to Kazakhstan.

In fact, air passenger traffic in India grew by as much as 200% in the past seven years or 60 million annually. The rail transport in the country, in comparison, carries an average of 23 million daily.

AirAsia Bhd of Malaysia has partnered with Tata Group recently to set up a local subsidiary to be called AirAsia India. It has four other local subsidiaries across the region via joint ventures with local investors in Japan, Indonesia, Philippines and Thailand.

Late last year, AirAsia placed an order of 100 A320s from Airbus company worth $9.4 billion on top of the 200 planes it had already ordered in 2011 from the same company. Its rival, the low-cost carrier IndiGo, similarly placed an order of 180 aircraft in 2011. It has since dislodged Jet to become the country's largest carrier in terms of domestic market share.

Jet Airways, for its part, is also weighing down to purchase additional 50 B737 MAX and another 10 B777-300ER as well as 50 A320neos to prop its fleet.

Currently, Jet Airways has a fleet of 100 aircraft while IndiGo has 65 planes.

Jet Airways commenced commercial operations in 1993 and has recently agreed to sell 24% stake of its shares to Etihad Airways for $370 million. The Indian government amended its FDI policy last year allowing foreign investors to own as much as 49% stake in local airlines.

The airline is seen to boost its services to Abu Dhabi with its partnership with Etihad Airways by mounting more direct flights from smaller cities in India.

It will take delivery of 10 B787s by 2015 to expand its overseas operations.

By: Pete Lee.