Jet Airways disclosed on Monday that it has entered into an agreement with Boeing to purchase 75 of its 737 MAX aircraft, as the Indian carrier draws up expansion plans to meet passenger demand in the world's fastest-growing aviation market. Jet Airways, India's biggest full-service carrier, said in a regulatory filing it had entered into an agreement to buy the planes.
The announcement of the huge order should also give US President Donald Trump reason for cheer as it comes at a time when has been attacking India for not allowing sufficient US goods into the country. This has been followed by the imposition of hefty tariffs on Indian goods with New Delhi being forced to retaliate.
This is the third agreement Jet Airways has entered into for US planemaker Boeing's 737 MAX narrowbody jets over the last one year, taking the total to 225 aircraft. The Indian commercial airline signed firm orders for 75 planes each earlier in October and April.
Based on Boeing's list prices, the latest deal would work out to as much as $9.7 billion depending on which 737 MAX the airline chooses. However, airlines usually get significant discounts from manufacturers, which brings down costs well below list prices.
The 737 MAX can seat between 130 and 230 passengers, depending on the variant. The latest agreement comes as Indian airlines rush to expand fleets to meet ever-increasing demand for domestic as well as international flights, making it one of the most targeted sales markets for Boeing and European rival Airbus.
Boeing said in July last year it expected Indian airlines to order up to 2,100 aircraft worth $290 billion over the next 20 years, calling it the highest-ever forecast for Asia's third-largest economy. However, Boeing's arch rival Airbus has estimated the market demand to be lower at around 1,750 aircraft Low cost carrier SpiceJet Ltd has earlier announced plans to induct fuel-efficient Boeing 737 Max planes from the middle of this year.
SpiceJet placed 100 Boeing 737 Max aircraft order in January last year. Besides the 100 aircraft, SpiceJet has an option to buy 50 more 737 Max planes that it can convert into a firm order later. Taken with a previous order for 55 aircraft, SpiceJet's total order stands at 205 planes. Of these, 155 will be delivered to the airline between 2018 and 2024.
During his address at the White House along with Prime Minister Narendra Modi in June last year, Trump had noted that an Indian airline (Spicejet) had placed an order for 100 new planes with a US company which will support "thousands and thousands of jobs".
Spicejet MD Ajay Singh had told journalists at the time that the move will expand the airline's India footprint and, as per the US Department of Commerce, create 132,000 highskilled, high-paid American jobs within the US. This was the number that Trump was probably referring to.
Domestic passenger traffic in India has grown at more than 20 per cent annually in the last few years. However, a lack of infrastructure and air traffic congestion at leading airports such as Delhi and Mumbai a proving to be a hindrance. The high charges for the use of facilities such hangars by the private managements of these airports also poses a setback for the airlines at a time when fuel prices have soared, adding to the cost of operations.