SpiceJet signed a Memorandum of Understanding (MoU) during the Paris Air Show, 2017 for 40 Boeing 737 MAX planes with a full-proof plan to increase its footprint in the booming aviation market. The low-cost Indian carrier announced its plan to induct the Boeing Max planes by mid-2018.
The SpiceJet order puts Boeing in a leading position by overthrowing Airbus, one of its biggest competitors as the former won 571 sales order in the Paris Air Show while Airbus claimed 336.
“We have placed a large order for the Boeing 737 MAX, in fact, the biggest ever placed by an Indian airline with Boeing. The new planes start to join the fleet in the middle of 2018 and with that our operating cost will further go down,” Ajay Singh, chairman and managing director of SpiceJet, said in a statement on Tuesday following the speech of Trump on the same day. US President Donald Trump, who recently hosted Indian Prime Minister Narendra Modi mentioned SpiceJet’s plans to induct the Boeing 737 MAX planes in his speech on Tuesday at the White House.
The MoU for 40 737 MAX, including 20 new orders for 737 MAX 10 and conversion of 20 of the low-cost carrier’s 737 MAX 8 aircraft of its current order to 737 MAX 10s was signed during the latest Paris Air Show.
“The agreement, valued at USD 4.7 billion (EUR 4.11 billion) at current list prices, is split evenly between 20 new orders for the 737 MAX 10 and conversions of 20 of the low-cost carrier’s 737 MAX 8 airplanes from its existing order to 737 MAX 10s,” Boeing said, announcing the agreement at the Paris Air Show.
Ajay Singh stated, “With the introduction of our 737 MAXs next year, we will be able to further expand our network while keeping our costs low for our customers. We got into a lot of trouble in 2014 and Boeing was there to support us. They ensured SpiceJet has revived again and became strong, therefore when we decided to place a new order, we decided to stick with our Boeing and I don’t think they will let us down. We think MAX completely change the economics of SpiceJet. Airbus approached us with an aggressive offer, but we felt that in the MAX we had a better aircraft and in Boeing a better partner.”
What’s in it for the US?
According to the US Department of Commerce, the order will not only expand SpiceJet’s India footprint but also create 132,000 high-skilled, high-paid American jobs within the US. During the diplomatic meeting between Prime Minister Narendra Modi and US President Donald Trump, Trump mentioned that an Indian airline had placed an order for 100 new planes with a US-based airline giant. He deduced that the move will support “thousands and thousands of jobs”. The move is also predicted to increase future economic ties between the two countries, with India slowly emerging as a leading economy in the global market.
Incidentally, SpiceJet has also placed an order for 25 Q400 aircraft with Canadian aircraft manufacturer Bombardier during the Paris Air Show. The move was welcomed as a part of SpiceJet’s plan to expand its regional footprint in India and neighbouring destinations with increased emphasis on Sri Lanka.
According to reports, the deal with Bombardier is valued at approximately USD 805 million (EUR 705.3 million) with each Q400 aircraft sporting a price tag of about USD 32.2 million (EUR 28.21 million). In addition, SpiceJet has taken the purchase rights for 25 additional Q400 aircraft.
“We feel there is a lot of potential for the aircraft (Q400) on international sectors, for example, flights to Colombo,” stated Ajay Singh.