Struggling to meet capacity demands, SpiceJet has opted to induct two Airbus A320s in its all-Boeing fleet. This news comes as there is little clarity on the return date of the 737 MAX and demand only rising.
A shift in direction?
Until now, SpiceJet had more-or-less shied away from actively leasing A320s to replace its grounded 737 MAX. Instead, the airline chose to induct many of Jet Airways’ 737s and continued to dry lease more 737s.
As the market for 737 leases becomes more and more expensive with the MAXs prolonged grounding, SpiceJet has begun openly toying with the idea of purchasing the A320 family for future growth, especially the A321LR and A321XLR.
SpiceJet currently operates 66 737NGs in its fleet. This makes SpiceJet is the largest carrier in the country for Boeing jets, and also the only airline except for Air India Express. The airline has also placed an order for 205 737 MAX 8 aircraft, of which 13 have been delivered.
The grounding of the 737 MAX has meant the airline has been unable to grow in a very opportune time for the Indian market. Following the demise of Jet Airways in April 2019, SpiceJet hoped to capitalize on Jet’s many domestic and international routes but was unable to due to MAX’s grounding the month before.
While SpiceJet did manage to lease a number of Jet’s 737s, it was not enough to meet the demand in the market.
Worrying signs for Boeing
SpiceJet has chosen to induct these A320s in time for the busy summer holiday season. This announcement also comes after reports of SpiceJet starting another carrier based out of Ras-Al Khaimah, focused on creating a market between India and the Emirate and allowing SpiceJet to expand into Europe using its existing fleet of aircraft.
This project will require another set of aircraft and it is yet to be seen if SpiceJet will wait for Boeing to deliver the 737 MAX or may choose Airbus for subsequent aircraft.
Currently, Boeing doesn’t have a large fleet of 737s flying, compared to its competitor, the A320. IndiGo, GoAir, Air India and Vistara all own A320s exclusively for their routes (Vistara is set to receive a 787 very soon). Aside from Air India Express’ fleet of 25 737s, without SpiceJet, Boeing has no access to the rapidly-growing Indian aviation market and could see a vital opportunity pass by.
SpiceJet’s recent success
SpiceJet has seen strong financial results in the past few quarters, a good sign that only a few years was headed down the Jet Airways path. Overall, the carrier grew nearly 60% in 2019, which is impressive considering the MAX crisis, and reported a modest profit in the last quarter of the year.
The airline is also hoping for an expansion in the upcoming year, focusing on increasing destinations. While the year ended in financial losses for the airlines, it demonstrated their ability to survive a crisis and perhaps given lessors the confidence to lease to SpiceJet. The wet lease of the A320s is demonstrative of the same.
While 2020 has seen a slowdown in traffic for the aviation market, SpiceJet has managed to maintain its second position in the Indian market and increase its market share to 16.6%. With consistent growth, a probable return of the MAX this year, and a new airline in the works, SpiceJet seems to be getting ready for a solid 2020.