SpiceJet likely to operate grounded Jet aircraft
Lessors of cash- starved airline Jet Airways are in talks with SpiceJet to reposition some of its Boeing 737 Next Generation aircraft.
SpiceJet, which has been hit by the grounding of 13 Boeing 737 MAX planes, is looking to secure used aircraft to maintain its expansion plans.
“Lessors of Jet Airways have discussed with SpiceJet to place their aircraft with the latter. SpiceJet wants 12-13 planes. Depending on the duration of the 737 MAX grounding, it may take more,” said a person aware of the development.
At least two lessors — GE Capital Aviation Services and BOC Aviation — have terminated the lease contracts of around eight planes because no clarity on payment has been given.
Lessors have grounded more than 50 of Jet Airways’ planes because the airline has been unable to pay them. It has been more than five months that the airline has made any payment to its lessors.
Regulators around the world have suspended flights of 737 MAX planes following the Ethiopian Airlines crash last Sunday. The MAX’s earlier variant, known as the NG series, continues to be the mainstay for carriers around the world, including Air India Express, Jet Airways and SpiceJet in India.
A SpiceJet executive confirmed the airline had a meeting with lessors on Saturday and is finalising the number of aircraft it intends to take.
SpiceJet and Jet Airways fly the similar Boeing 737 NG aircraft but with a separate configuration. “As of now there are 13 planes grounded. We had planned to induct at least 15 more by the end of 2019. We are looking at the grounded Jet Airways planes to dry lease them for six months,” the executive said, adding that the airline was eyeing wet leasing planes from European carriers.
In wet lease, an arrangement under which an airline leases aircraft along with crew, maintenance from the lessor is costly and will lead to a spike in operational cost for the company, which had recently started enjoying cost benefits from the fuel efficiency of the 737 MAX. According to the company’s statement in OctoberDecember, owing to a lower fuel burn of the aircraft, its cost increased only 2 per cent while the jet fuel price had increased by 6 per cent.
A second SpiceJet executive said the airline was engaging with Boeing to understand how long the grounding of the MAX would be before taking a decision on leasing Jet Airways aircraft. “As of now it looks like it will be two months that the planes will stay grounded. We will not put a brake on our expansion plans or surrender the airport slots,” he said.
A deal with SpiceJet will be a win-win for the lessors and the airline. For SpiceJet, getting Jet Airways’ aircraft means that they will come a lot cheaper than at the existent market rates and clearance from the regulator, Directorate General of Civil Aviation, will come quicker because the planes are registered in India.
“Getting the planes will be faster and it would be cheaper than the existing market rate as the lessors will try to find a home for the aircraft after termination of the deal,” said a SpiceJet executive.
The grounding of the MAX will increase the demand of NG and increase its rate by around 10 per cent, said an aviation consultant.