A SpiceJet Boeing 737-800 aircraft taxis on the tarmac after landing at Chhatrapati Shivaji international airport in Mumbai November 26, 2012. Photo: Reuters/Danish Siddiqui
A SpiceJet Boeing 737-800 aircraft taxis on the tarmac after landing at Chhatrapati Shivaji international airport in Mumbai November 26, 2012. Photo: Reuters/Danish Siddiqui

India’s SpiceJet seals US$22 billion Boeing deal

Budget carrier agrees to buy 100 new MAX 737 aircraft to boost fleet in expansion plans

January 13, 2017 4:33 PM (UTC+8)

Indian budget carrier SpiceJet said on Friday it had agreed to buy 100 new MAX 737 aircraft from Boeing, with an option for 50 more, ramping up its fleet as it targets expansion in the world’s fastest growing aviation market.

SpiceJet said it had signed a deal for buying up to 205 planes from Boeing – worth up to US$22 billion at list prices – but the announcement includes 55 jets already announced in a 2014 deal and the possible follow-on order of 50 more.

“As part of this transaction, [Boeing] have not only been kind enough to give us good commercial terms but worked hard to reduce the maintenance cost of the aircraft going forward,” Ajay Singh, SpiceJet’s chairman, told a news conference in New Delhi.

A source said on Thursday that SpiceJet was set to seal an order for at least 90 new 737 jets from Boeing.

Singh said the purchase rights include an option to buy wide-body aircraft for long haul journeys as the airline considers launching low-cost flights over long distances.

The deal is a welcome boost for Boeing in India, where SpiceJet is the US company’s only major customer among the budget carriers now dominating the country’s air industry.

Indian airlines such as the biggest, InterGlobe Aviation’s IndiGo, as well as GoAir and SpiceJet have ordered hundreds of new planes as they rush to win a slice of the boom in demand for air travel.

SpiceJet has about 13% of the Indian air passenger market, behind market leader IndiGo, Jet Airways and state-run Air India. Indian passenger numbers are increasing by more than 20% annually thanks to low prices and rising disposable incomes.

SpiceJet has been in talks with Boeing and Airbus since 2015, and under chairman Singh, the company has been rebuilding its business since almost collapsing after running out of cash in late 2014.

The airline has grown its market share and returned to profitability but it remains far smaller than market leader IndiGo.

Despite soaring passenger numbers, Indian carriers have struggled to achieve consistent profitability because of fierce competition, regular price wars and high operating costs.

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