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article imageIndia's SpiceJet places $4.4 bn order with Boeing

By AFP     Mar 12, 2014 in Business

Indian budget airline SpiceJet has placed an order for 42 Boeing 737 MAX planes in a deal worth $4.4 billion, the companies announced in a joint statement on Wednesday.

Delivery of the single-aisle planes will begin from 2017 as the cash-strapped SpiceJet seeks to win new customers in the vast but fiercely competitive Indian market.

"The induction of Boeing 737 MAX will further modernize our fleet, improve customer experience, and ensure that we operate the most efficient fleet well into the future," said S.L. Narayanan, chief financial officer of SpiceJet's parent, Sun Group.

The two companies signed a memorandum of understanding on the deal on Wednesday at an air show in the southern Indian city of Hyderabad, according to the Press Trust of India news agency.

India's aviation market has been going through tough times in an economy that grew at a decade low of 4.5 percent last year.

But airline companies see tremendous headroom for the market as the number of people taking flights in India is still very low compared with developed markets.

Low-cost carriers, including SpiceJet, IndiGo and Go Air, already dominate with a near 65-percent market share.

Abu Dhabi-based carrier Etihad Airways recently tied up with one of India's leading airlines, Jet Airways, after the government relaxed foreign investment barriers.

In the statement, Boeing senior vice president Dinesh Keskar said the strong fuel efficiencies of the 737 MAX "supports SpiceJet's mission to become India's preferred low-cost airline".

Boeing says the 737 MAX will feature eight percent lower per-seat operating costs than "the future competition".

Keskar said development of the 737 MAX is on schedule with the first flight slated for 2016 and deliveries to customers to begin in 2017.

Boeing has said the 737 MAX has received more than 1,800 orders so far.

With the latest announcement, SpiceJet has ordered 90 aeroplanes directly from Boeing, which includes the 737-800, 737-900ER and now the 737 MAX.

To date, SpiceJet has taken delivery of 31 of the Boeing planes.

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