Boeing is in discussions with a new low-cost Indian carrier to provide up to 80 of its 737 MAX aircraft for its fleet, gaining a stronger narrow-body foothold in the local market.
According to The Seattle Times, unidentified sources said the airline was tossing up between Airbus’ A320neo and the 737 MAX, but Boeing’s is available sooner.
Asaka Air, the budget airline backed by billionaire Rakesh Jhunjhunwala – known as ‘India’s Warren Buffet’ – has invested around US$35 million into the carrier, waiting for the Indian aviation ministry’s approval.
The airline plans to use sale-and-leaseback deals to finance the aircraft, according to the sources, but it has not been confirmed yet.
Jhunjhunwala expects to operate a fleet of over 70 aircraft in the next four years, and an order for that many 737 MAX-8 jets would be worth around US$8.5 billion.
The sources said Boeing would offer larger discounts for this deal.
This has become a trend recently, seeing planemakers offer large discounts in the competitive recovery – Boeing offered ITA, Italy’s new airline 70 per cent discounts to win over Airbus.
If this deal is penned, it will be a major breakthrough for Boeing as the 737 comes back to life while Airbus holds a tight grip on the narrow-body market.
For almost two years, Boeing’s 737 MAX aircraft were grounded following two crashes within months in Ethiopia and Indonesia, killing 346 passengers.
Last November, the jets gained re-certification in the United States again and are slowly tapping into international airspace.
The Directorate General of Civil Aviation approved Boeing’s 737 MAX to fly over Indian airspace in April, pushing it one step closer to recertification in the nation.
Nitin Sarin, managing partner at law firm Sarin & Co, told Reuters in late July that this new airline will cause a “big fight between Airbus and Boeing”.
“For Boeing this is a great opportunity to step in and up their game, considering they don’t have any other major operator for their 737 aircraft in India apart from SpiceJet,” Sarin said.
SpiceJet is Boeing’s last remaining airline with outstanding orders for the aircraft, waiting on over 100 of them.
SpiceJet operates a fleet of 97 aircraft – between Boeing and De Havilland Canada – and half of them are the 737 MAX, and most are parked for now due to the pandemic.
While the two companies have not decided on a compensation package for the ones it has grounded – covering associated losses – SpiceJet is not likely to take more deliveries, according to the sources.
Now, deliveries originally going to other Indian carriers are available, allowing Boeing to offer aircraft out of schedule, they said,
The US Federal Aviation Administration remains in talks with India’s aviation regulators, but it is still unknown when the jet will be officially recertified.
Mark Martin, CEO of aviation company Martin Consulting, told The Hindu Business Line in July before it is recertified, Boeing will “need to win back credibility and confidence” with stakeholders.
A representative from Boeing said more than 170 out of 195 global regulators have opened airspace for the MAX since November.
