SpiceJet Orders Boeing Planes New

Sunday, 30th March 2014 at 11:12am

India's second-largest low-cost carrier made headlines recently when it announced the placement of orders for 42 Boeing B737 planes from Washington-based Boeing Company during the week-long Hyderabad Air Show.

SpiceJet has been in the red in recent years along with most other local airlines yet it is pursuing its aggressive modernization program. The purchase of new planes, according to the airline, is necessary to replace its aging planes which will retire soon.

The B737 MAX airliner is the newest family of aircraft currently developed by Boeing Commercial Airplanes. The new airliner is based primarily on the Boeing 737 Next Generation family which it will eventually replace soon.

According to an airline official, the B737 planes will enable them to save on fuel costs which is the primary concern of most Indian carriers. It will also enable them to offer improved customer experience with the plane's state-of-the-art technology features.

Questions remained as to how the financially-challenged airline would fund the purchase when it is piling up losses and how it would fare in the coming years with the arrival of the newest budget player, AirAsia India, a subsidiary of the market leader, AirAsia Bhd., in the very competitive Indian market.

The Indian aviation industry, in particular, has been in a bad shape with most airlines posting losses upon losses due largely to skyrocketing fuel costs, high airport taxes and other fees, labor unrest, and weak local currency.

Industry analysts earlier saw SpiceJet as a potential recipient for foreign investment after the government eased up its FDI policy in 2012 to encourage foreign airline companies to invest in local airlines. However, there has not been any single foreign airline showing interest in SpiceJet in terms of capital infusion through stake purchase. The rumor about a UAE-based investor showing interest in the airline remained just a rumor up to this day.

The modernization program of SpiceJet through the purchase of 42 B737 MAX airliners is one way of drawing customers to fly with the airline.

A fleet of young aircraft will definitely bring down airline's operating costs as B737 MAX airliner is designed to be more fuel-efficient, down by 14%, than the current B737 family which will cease production soon.

All in all, the airline has a total order of 70 aircraft from Boeing Company. It operates an all-Boeing fleet of 58 aircraft, all of which are from the B737 family. By 2017, as soon as it takes delivery of the first batch of the B737 MAX planes, it will retire by phases the older B737 from service.

By: Pete Lee.