SpiceJet chairman hints at the possible purchase of Airbus A321LR and XLR jets

Grounding of the Boeing 737 Max, which constitutes most of SpiceJet's fleet, is the main reason that could pave way for this significant deal for Airbus.

September 27, 2019 By Ayushee Chaudhary Photo(s): By SpiceJet, Boeing
SpiceJet Chairman Ajay Singh

Indian budget carrier, SpiceJet Ltd. may consider buying a "sizeable" number of Airbus A321LR and XLR jets to integrate a planned expansion, informed SpiceJet Chairman Ajay Singh during his visit to New York recently. However, he clarified that as of now no decision has been made and the airline is only weighing an order for Airbus SE planes while Boeing is still encountering the fallout of its grounded 737 Max. "Airbus has made us a commercial offer and we are evaluating it," he said.

The exact size of a potential transaction with Airbus has not been specified yet but Singh mentioned that any aircraft order that the airline will place would consist of at least a 100 aircraft.

"You need to keep evaluating, and we are evaluating the Airbus options" said Singh. "It's not the easiest thing in the world to do, of course -- our entire infrastructure is geared for a Boeing fleet -- but if this takes too long, we may not have too much of a choice.

While the official prices for both the LR as well as the XLR are not in the public domain, both these jets are longer variants of the A321 family, the lowest price for which begins at $118 million each.

While the airline's fleet consists of Boeing and Bombardier Inc. planes, the air carrier's chairman added that SpiceJet would consider flying Airbus models as well, particularly if the Max issues continue to distract Boeing.

"You need to keep evaluating, and we are evaluating the Airbus options" said Singh. "It's not the easiest thing in the world to do, of course -- our entire infrastructure is geared for a Boeing fleet -- but if this takes too long, we may not have too much of a choice."

The amplifying Max glitch

In its 103-year-old history, right now Boeing is entangled in one of the biggest crises and at such a time, SpiceJet's discussions with the U.S. planemaker's largest peer, Airbus, could torment Boeing with a high-profile withdrawal.

SpiceJet possesses 13 of the Boeing Max jets in its fleet and a commitment had been made by the airline to buy about 205 of single-aisle aircraft which is presently grounded. This decision was made as SpiceJet aims to extend its capacity to cope with the rapidly growing demand for air travel in the nation.

SpiceJet possesses 13 of the Boeing Max jets in its fleet and a commitment had been made by the airline to buy about 205 of single-aisle aircraft which is presently grounded. This decision was made as SpiceJet aims to extend its capacity to cope with the rapidly growing demand for air travel in the nation.

Following a couple of crashes of the Boeing 737 Max aircraft that killed 346 people, the Max has been grounded around the world since March. Six months down that, there is still no clarity as to when would the jet return to service as the assessments of Max by regulators worldwide are conducted. 737 is also Boeing's largest source of profit.

SpiceJet possesses 13 Boeing 737Max jets in its fleet and a commitment had been made by the airline to buy about 205 of single-aisle aircraft which is presently grounded.

As informed by Singh, the aircraft manufacturer has informed SpiceJet that it expects U.S. regulators to re-certify the plane in early November. But that's not all, Indian regulators plan to conduct their own checking. With all this, Singh only hopes that the airline will get to re-start flying its Max planes in January. The carrier remains in conversations with Boeing about compensation for the costs incurred from the grounding. While the Max stays grounded, SpiceJet took several older 737s meanwhile but the airline chairman highlighted these to be expensive and less efficient.

"We look forward to the Max aircraft coming back because that's where the biggest pain point for SpiceJet is currently," Singh said.

Boeing, on the other hand, is making all efforts to rebuild trust in the safety of Max and get it to fly at the earliest. Having formed a new board panel, by recommending changes to the structure of Boeing, and by designing practices after the two crashes, Boeing's directors are edging their focus on safety. In a statement released this week, the board's new Aerospace Safety Committee will oversee the development and manufacturing of Boeing aircraft, the company said in a recent statement this week. The group is being led by Retired Admiral Edmund Giambastiani, a former vice-chairman of the U.S. Joint Chiefs of Staff.

The "new midmarket airplane", also being referred to as NMA or the 797 by some analysts, is also facing a delay due to Max grounding as the engineers and the program manager for the NMA have been shifted to the 737 program. Boeing restated that no decisions on the midrange plane would be made until the Max is back in the skies.

Delay in the new midrange jetliner

The grounding of Boeing's Max 737 world over is also pushing the decision further for the manufacturer about building a midrange jetliner. The "new midmarket airplane", also being referred to as NMA or the 797 by some analysts, is also facing a delay due to Max grounding as the engineers and the program manager for the NMA have been shifted to the 737 program. Boeing restated that no decisions on the midrange plane would be made until the Max is back in the skies.

Singh stated that he understands Boeing's decision to focus on the Max but his airline needs to know within a year if the plan-maker will be mobbing further with the NMA, adding that SpiceJet would consider a competing midrange jetliner if Boeing decides to build one.

"We need for them to make a decision quickly, because clearly there is a market for that aircraft, and that space will be taken up by Airbus unless Boeing announces something soon," said Singh.

Meanwhile SpiceJet's cargo division, SpiceXpress took delivery of its first 737-800 Boeing Converted Freighter (BCF) earlier this week. This comes as the airline expands its air cargo operation to better serve one of the world's most populated regions and offer new route options.

It is not just SpiceJet that is NMA's potential buyer pushing Boeing to take a decision, there is also Delta Air Lines Inc. among others.

So the delay in certification of Boeing's 737 Max, there is a lot that the manufacturer has on stake.

SpiceJet's cargo division grows with a BFC

But all is not down the drain too for the company. Meanwhile SpiceJet's cargo division, SpiceXpress took delivery of its first 737-800 Boeing Converted Freighter (BCF) earlier this week. This comes as the airline expands its air cargo operation to better serve one of the world's most populated regions and offer new route options.

"We are expanding the markets we currently serve, particularly in the Middle East, Hong Kong, and Bangladesh and the 737-800BCF's reliability and versatility are helping enable our strategic direction," said Singh.

The standard-body freighter, which is the first 737-800BCF to be operated in South Asia is on lease from NGF Alpha Limited, a division of Spectre Cargo Solutions stated the press release.

The 737-800BCF's certification was validated by India's Directorate General of Civil Aviation (DGCA), hence clearing the way for the freighter to serve a rapidly growing region and busy international trade hub.

"SpiceJet has made bold moves to strengthen its position in one of the most dynamic and fast-growing aviation markets," said IhssaneMounir, senior vice president Commercial Sales, and Marketing for The Boeing Company. "We are excited that SpiceJet has chosen to expand its SpiceXpress operation with the 737-800BCF. This converted freighter gives operators just the right size, operating economics and capabilities to succeed in busy domestic and regional routes."

The 737-800BCF had entered service last year and the program has ramped up production with output set to more than double to 17 units in 2019 to meet customer demand.

Compared to the older standard-body freighters, the 737-800BCF offers operators lower operating cost per payload ton and is built on the popular and reliable Next-Generation 737 passenger airplane. Carrying up to 52,800 pounds of payload, the 737-800 BCF opens new markets to operators with its long-range capability and high reliability. Presently, it is currently operating on four continents (Africa, Asia, Europe, and North America).