Wednesday, July 28, 2010

SpiceJet Orders 30 Boeing Narrowbodies, Posts 35% Jump In First Quarter Revenue


Aviation Daily Jul 28 , 2010 , p. 08
Neelam Mathews

Fortified with new management and media baron owner, Indian budget carrier SpiceJet announced an order for 30 Boeing 737-800s, to be delivered between 2014 and 2019.

The carrier, which is set to fly international routes in September, chose the Boeing 737NG because it is "the most technologically advanced single-aisle airplane, which offers the best technical reliability and lowest operating unit cost, [and] is vital to our low-cost structure," Director Bhulo Kansagra says.

SpiceJet has a fleet of 21 Boeing 737-800s and 737-900s and expects seven more deliveries this fiscal year, which began April 1.

Announcing its first-quarter results, SpiceJet reported a 35% increase in operating revenue. It also put to rest speculation that it will not buy regional aircraft; however, on new branding and the possibility of switching its hub from Delhi to Chennai, the carrier says, no changes will be made as of now.

India's economy has averaged 7% annual growth in the past 10 years. The record growth in air travel, which expanded rapidly the past eight years due to liberalization and favorable economic conditions, is now tracking at 2007 levels, says Boeing.

SpiceJet seems to have proved Boeing right. Dinesh Keskar, Boeing president-India, recently said that air travel in India, which is tied closely to the country's economic growth, will rebound.

"We expect domestic demand to grow at 16% during the current year and to sustain a 12-14% annual growth going forward in the medium term. This growth will necessitate significant capacity induction, and the fresh order announced by us today will ensure that SpiceJet will remain at the forefront of the growth story in the Indian skies," Director Kishore Gupta said.

"There is strength and resilience in the Indian commercial aviation sector over the long term," Keskar had said in a statement. "The potential for future growth of air travel, both domestically and internationally (in India), is among the greatest in the world."

As the aviation sector grows, low-cost airlines are expected to do very well. "We expect SpiceJet to take a disproportionate share of the growth," Director Ajay Singh said. The airline has a market share of more than 13%, operating 141 flights daily to 19 cities.

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