India’s SpiceJet shows long-haul intent with Boeing-Airbus contest

Bloomberg

Indian budget airline SpiceJet Ltd. has begun an order contest between Boeing Co. and Airbus SE for wide-body aircraft, in the strongest indication yet that it will go ahead with a move into discount long-distance flights. The stock rose to their highest ever.
The carrier is evaluating the U.S. manufacturer’s biggest 787-10 Dreamliner together with Airbus’s A350-1000, Ajay Singh, its chairman, told Bloomberg TV in London.
SpiceJet is considering the introduction of flights to more distant markets including Europe, but needs Boeing and Airbus to come up with proposals to minimize costs, Singh said. The carrier’s jetliner order book is limited to 175 Boeing 737 narrow-body planes.
Carriers in India, including market leader IndiGo, are set to order more than 1,000 planes as they look to tap an emerging middle class with enough disposable income to fly for the first time, according to Sydney-based CAPA Centre for Aviation. However, that could include “only a limited number” of wide-body and regional aircraft, according to the study done in May.
India has the potential to be a “tremendous” long-haul market, “if you can work out the math and bring down the cost,” Singh said. While the nation of 1.3 billion people is the world’s fastest-growing aviation market, expanding at a 20 percent annual clip, it also remains “incredibly price sensitive,” he said.
SpiceJet, based in Gurgaon near New Delhi, has purchase rights for 50 more Boeing aircraft of an unspecified type. It could use some of those options if it chooses to buy the 787, according to Singh, who said he’s also looking for measures to maximise efficiency.
The airline co-founder said it’s still too early to comment on the size of a potential order or specific routes it’s eyeing for the long-haul operation. SpiceJet’s fortunes hit bottom in December 2014, when lessors took away some aircraft, the carrier missed salary payments and canceled more than 2,000 flights that month. Since then, Singh has returned to the company he founded and infused capital as oil prices tumbled, scripting a turnaround which saw the airline post profits for 10 consecutive quarters.