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Business News/ Companies / News/  SpiceJet leasing Jet Airways’ grounded planes to keep fares in check

SpiceJet leasing Jet Airways’ grounded planes to keep fares in check

SpiceJet is likely to take around 50 aircraft on lease from lessors, according to sources
  • Jet Airways is currently operating 41 of the 119 planes in its fleet 
  • SpiceJet said last week it operated with 94% capacity utilisation in February (Reuters)Premium
    SpiceJet said last week it operated with 94% capacity utilisation in February (Reuters)

    New Delhi: Air travellers could be assured of fares remaining reasonable with budget carrier SpiceJet planning to lease distressed Jet Airways' grounded aircraft from their lessors in a move that will restore part of the airline industry's capacity.

    A person privy to discussions between aircraft lessors and the two airlines said that as many as 50 aircraft are on offer to SpiceJet. "Commercial negotiations are on for the leasing deal with SpiceJet. It will make immense sense to find an operator in India for these grounded planes than taking them elsewhere," said the person who spoke on condition of anonymity.

    With Jet Airways operating only about 41 of the 119 planes it had in its fleet before the current liquidity crisis hit the airline, industry capacity has shrunk in recent weeks. In addition, the recent grounding of the controversial Boeing 737 Max 8 aircraft by the Directorate General of Civil Aviation (DGCA), too, has affected the aviation industry's capacity.

    For SpiceJet, which had to cancel several flights on account of this, leasing Jet's grounded planes will be a quick solution to replenishing capacity. SpiceJet said last week it operated with 94% capacity utilisation in February.

    The person quoted above said that once a commercial deal is struck between aircraft lessors and SpiceJet, it may take a few weeks to repaint the planes and deliver them to SpiceJet for induction into its fleet.

    Airfare usually goes up during times of unexpected flight cancellations as airlines focus on making alternate arrangements to affected passengers rather than taking fresh bookings at low fare. The industry capacity reduction has already affected fares. A Delhi-Mumbai flight booked about 24 hours in advance on Friday is about 20% costlier than a similar flight booked last week one day before the journey, according to data available from online travel portals.

    SpiceJet taking lease of about 50 of Jet's grounded planes is set to ease this pressure on capacity, boost competition and keep fares in check. The DGCA has already cautioned airlines in recent weeks against any unreasonable spike in ticket prices.

    The regulator had also said last week that Jet Airways' fleet of 41 aircraft in operation could see a further reduction, which may impact the airline industry's capacity. However, with national polls due in April, the government is giving its blessings to a revival scheme for Jet Airways, which its lenders, led by state-owned bank SBI, are working out with the company's shareholders. SBI is also likely to provide interim financial support if a turnaround scheme is approved. 

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    Published: 22 Mar 2019, 12:53 PM IST
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