India’s second
largest airline, Jet Airways buying 75 new fuel-efficient Boeing 737 MAX
aircrafts to expand its fleet. As a part of its ambitious growth plans coupled
with focus on replacing aging fleet, Jet Airways opted for highly efficient 737
MAX from US-based aircraft manufacturer Boeing (NYSE: BA). At a list price,
order size is estimated at $8 billion which is largest single order till date
by Jet Airways (NSE: JETAIRWAYS). Deliveries of new aircrafts would begin by
mid-2018.
Aviation fuel in
India is costlier compared many countries in the world. Currently, jet fuel
costs 60% more in India than Singapore. As a result, focus on acquiring fuel
efficient aircrafts to achieve better cost structure is increasing among Indian
airline companies. Newer aircraft improves at least 15%-20% fuel efficiency for
airline. While cost of aviation fuel is about 50% of revenue of airline company
in India.
Jet Airways is
facing stiff competition from Low Cost Carriers (LCCs) such as Indigo, Spicejet,
GoAir and many more. As a result, improving profitability through rationalization
of cost structure is primary focus for the company. Moreover, efficient and
modern fleet would help Jet Airways to take advantage of expanding domestic market
coupled with serve international routes effectively.
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