SpiceJet plans to land Kodiak planes in sea, fields in $400mn deal

Bloomberg

The next sales pitch for one of the world’s fastest-growing airlines may turn out to be: No runway?
No problem!
SpiceJet Ltd., an Indian budget carrier that’s seen its stock zoom 899 percent in three years, wants to open up the third-biggest aviation market even more. That means targeting the billion Indians who’ve never flown before, either because they can’t afford it or because they don’t live near a functioning airport.
The airline is in talks with Japan’s Setouchi Holdings Inc. to buy about 100 amphibious Kodiak planes that can land anywhere, including on water, gravel or in an open field. The deal, valued at about $400 million, would help SpiceJet capitalise on PM Narendra Modi’s plan to connect the vast nation by air without waiting for billions of dollars in upgrades to colonial-era infrastructure.
“Airports are in short supply in India,” SpiceJet Chairman Ajay Singh said. “Lots of the growth in India is happening in small markets, but those small markets have little or no connectivity. So we are looking for a solution where we can get flights to places where no airports exist.”
While negotiations continue,
Hiroshima-based Setouchi plans to conduct a demonstration water landing in November, said Go Okazaki, an executive managing director in the overseas business division. He couldn’t estimate when the deal would close.
India’s airlines handled 100 million domestic passengers last year, making it the No. 3 market behind China and the US. To handle growth, India will need at least 2,100 new planes worth $290 billion in the next 20 years, Boeing Co. estimates.
Modi unveiled a plan in 2015 to bring aviation to the remotest parts of the world’s seventh-biggest land mass. The government programme subsidises airfares while offering free landing and parking to airlines. Modi envisages domestic ticket sales quintupling in the next decade to half a billion units. About 97 percent of India’s 1.3 billion people have never been on an airplane, according to SpiceJet. But there’s a problem finding places to pick up and drop off those passengers.
Only about 75 of the 450 areas designated by the Indian government as an airport or airstrip currently handle commercial flights. That exacerbates the stress on major airports in New Delhi, Mumbai and Bengaluru, where hardly any landing slots are available.
Infrastructure at most of those dormant airports—runways,
control towers, terminals and maintenance sheds—has suffered decades of neglect, making the sites unusable. That’s where SpiceJet’s amphibious strategy comes in. The Kodiak aircraft, which can seat either 10 or 14 people, is capable of taking off or landing on a 300-metre strip of water or land, and has a range of 1,000 kilometres.
The sales agreement could be finalised in as soon as three months, SpiceJet said. The planes, made by Sandpoint, Idaho-based Quest Aircraft Co., could allow SpiceJet to land at as many as 300 of India’s currently unused airports, Okazaki said. “The basic logic for this is that in India, we need last-mile connectivity,” Singh said. “The amphibian plane opens up a lot of areas, creates a lot of flexibility.” The Kodiak planes also could be deployed to tourist sites such as the lake-town of Udaipur, where the airport is far away from the city, Singh said.
India’s aviation regulators are studying whether to allow such planes into the commercial fleet and are reviewing a list of about 20 proposed landing sites, a government official said.