New Delhi: SpiceJet may add 20 aircraft to its fleet this year, with the fuel-efficient Boeing 737 MAX aircraft likely to make up a majority of them. With the addition of the Boeing Max, the low-cost carrier will be able to travel to countries up to eight hours away from India. Gurgaon-based SpiceJet added Jeddah in Saudi Arabia as its ninth overseas destination recently.
“This opens up new markets in China and countries in the Commonwealth of Independent States,” Ajay Singh, chairman and managing director, SpiceJet, said.
Taking the fleet size to 74 planes, the carrier added 12 new aircraft in the third quarter of FY19, which included nine Boeing 737 Max planes and three Q400s. The airline had added just one in the first two quarters of FY19.
Boeing Max to accelerate airline growth in Q4
The Boeing Max addition will accelerate SpiceJet’s capacity growth to 20-25 percent during the fourth quarter of FY19, analysts said. “With all the additional aircraft being B-737 Max with 15-20 percent greater fuel efficiency than existing aircraft, SJ (SpiceJet) will also start benefits of lower fuel costs,” brokerage firm Edelweiss noted.
In Q3FY19, yields at the carrier improved 4 percent year-on-year owing to higher pricing power on routes to tier-2 cities which make up 70 percent of air routes. The focus on yields resulted in a 4 percent y-o-y drop in passenger load factor (PLF) during the quarter. “Contrary to market fears, PLF has proven less elastic to yields than anticipated,” analysts at Edelweiss added.
SpiceJet is expected to improve yields as it takes more international routes, analysts at ICICI Securities said.