Jet Airways may order at least 50 Boeing 737 Max planes this year

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Bengaluru: Naresh Goyal-promoted Jet Airways Ltd may order at least 50 Boeing 737 Max planes valued at about $5 billion this year to expand its market and secure spots in the aircraft supply chain, a top executive from the US aircraft maker said.

Jet Airways with a 114-plane fleet has 17% of the domestic passenger market share and a sizable international presence, but it has been losing domestic market share to rivals like IndiGo, which now controls about 40% of the local market.

“Jet will certainly look at a re-order for the Max. I would say minimum 50 and then you go higher than that. The reason I say 50 on the basis of growth and replacement (of Jet airways’ current fleet and orders). However, they might go beyond 50, based on what SpiceJet has done or IndiGo has done or even GoAir has done, a relatively smaller airline in operations than Jet. So, Jet may go for a higher figure but I would say 50 at least,” Dinesh Keskar, senior vice president sales, Asia Pacific and India of Boeing Commercial Airplanes, told Mint in an interview on the sidelines of the Aero India air show here.

IndiGo has nearly 400 fuel-efficient Airbus A320neo planes on order, while GoAir recently firmed up its order of 72 Airbus A320neo planes, taking its order book to 144 aircraft.

SpiceJet which had similarly ordered 42 Boeing B737 MAX planes in 2014 ordered more planes in January taking its order book to 100 planes, with options to firm up more at later date.

Jet had similarly ordered 75 Boeing Max planes in 2014. It will have a window this year to book additional slots.

“They have to do sometime this year,” Keskar said, referring to the supply chain.

It is not to difficult to see why: There is growth and incoming competition .

India has close to 450 planes in service and about 900 planes on order, indicating the growth that lies ahead. Indian airlines flew 99.88 million passengers in 2016 compared with 51 million in 2010, according to government data. Indian airlines were expected to touch 100 million passengers in 2016-17, a figure almost reached in 2016 with 23.18% growth. The International Air Transport Association (IATA) too expects India to displace the UK as the third-largest aviation market by 2026.

With all other airlines inducting Airbus neos starting this year, Jet will need a compelling proportion to compete on costs.

Jet fuel prices account for more than 45-55% of an airline’s revenue in India. A 4% reduction in fuel costs adds around 2% to the operating margins of airlines.

Max and Neo promise as much as 20% fuel savings.

Keskar also said Boeing will deliver a “wave of Max” from next year to its customers Jet and SpiceJet from the previous orders they have placed.

In 2018, Boeing will deliver about 12-18 planes or about 2-3 a month from third quarter.

This year, it will deliver four more Dreamliners to Air India followed by three long haul Boeing 777s in the first quarter of 2018.

The Tata-Singapore Airlines’ venture Vistara is also expected to order wide body planes as it gears up for its international operations next year.

“Vistara has one and half years to go. We have briefed them,” Keskar said, adding he hopes to pitch for that deal when it becomes available.