‘Spring Air has enough planes on order to meet demand’

Bloomberg

As many airlines across Asia join a rush to expand their fleets by ordering hundreds of jets, China’s top budget carrier is putting
a pause to its new plane orders and said it will instead focus on operations.
After signing an agreement in December with Airbus Group SE for 60 A320 aircraft, Spring Airlines Co. said it has enough planes to grow its capacity by a targeted 15 percent to 20 percent annually. The operator isn’t likely to
buy more in the “foreseeable years to come,” Chairman Wang Zhenghua said in an interview in Shanghai on Friday.
“How many more do you expect us to buy?” said Wang, who is also the founder of the airline. “Some of the new planes we prepaid for will be gradually put into service.” The company has 60 in its fleet at present, including 33 leased jets. Wang’s strategy of capping new plane orders is in contrast to the approach taken by companies such as AirAsia Bhd., the continent’s biggest discount carrier, which last month announced a deal to buy 100 A321neos from Airbus, taking its total orders of A320-series planes to 575. The emergence of low-cost operators is making air travel more affordable in Asia, and has fueled a double-digit growth in passenger traffic in countries such as China and India, according to the International Air Transport Association.

SINO-JAPAN ROUTES
Shanghai-based Spring Airlines in December said it would buy 45 A320neo planes and 15 A321neo jets in a deal valued at $6.3 billion at list prices, not including discounts customary for large orders. The aircraft would be used on some of the 36 new international routes Spring Air had introduced last year.
The company has 116 planes on order so far and its fleet will reach about 100 by 2018, Wang said. Shares of the company have declined 20 percent this year to 48.50 yuan, compared with a 17 percent drop in the Shanghai Stock Exchange Composite Index, according to data compiled by Bloomberg.
Spring Air’s Wang said there’s too much competition for air-travel services between Japan and China, adding that he expects some reshuffle in the routes.

BUCKET OF GOLD
“We made the first bucket of gold in this market and more have piled in after seeing that,” Wang said, referring to the China-Japan services. “Those who aren’t well-prepared will be phased out gradually and more rational and suitable players will stay.”
Spring Air’s low-fare subsidiary in Japan, which was started in August 2014, offers services to 27 routes between the two countries and within Japan.