Jet Airways to expand its fleet with new 75 fuel efficient aircrafts from Boeing

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.  

You may also like to read Market leader Indigo orders 250 A320s, biggest in the history of Airbus

 

Market leader Indigo orders 250 A320s, biggest in the history of Airbus

India’s largest airline with domestic market share of 38% has given order for 250 Airbus A320neo single-aisle jets for about $26.6bn at list price. Although typically, customer gets discounts on such bulk size orders. This is biggest order in the history of European company Airbus till date, deliveries are expected to begin in 2018. For Airbus, backlog for A320neo planes now stands at 4,100.

 

 

Indigo which is looking at fast growing aviation market by offering affordable fares and efficient service. Since its inception in 2006, Indigo has overtaken bigger names such as Jet, Kingfisher and Air India in last few years to establish command over Indian market. During 2005 Indigo ordered 100 A320s, all of them delivered. While in 2011, Indigo placed ordered for 180 planes worth $15bn to be delivered in phases till.  With recent order of 250 A320neo, Indigo’s Airbus fleet size would reach 530 aircrafts. With newer aircrafts fitted with more efficient engines and large Sharklet wing-tip devices, Indigo expects fuel savings of 20% by 2020.   

 

 

European giant Airbus gets big boost with this order and its long term relationship with market leader. Indian aviation market is expected to post robust growth in coming years and expected to order at least 1,290 new aircrafts by 2032 valued at $190bn. While India’s market leader, Indigo, looking at strengthening its presence in low cost carrier (LCC) market and preparing itself for competition from new entrants like AirAsia and Singapore Airlines. The company is planning an IPO in near future to raise $500mn which could value Indigo at $4bn. The only profitable airline in Indian market is expected to improve its market share beyond 40% in the current fiscal as competition is facing losses and mounting debts.   

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