Not strong enough to take on a gamble: SpiceJet on AI buyout

SpiceJet CMD Ajay Singh today said the airline was not keen on buying out Air India at present, as it is "not strong enough to take on a gamble" even though he considered the national carrier a "good asset".

Rival and market leader IndiGo has already written to the government showing its keenness to buy out the national carrier's flight operations, particularly the international services, with the Union cabinet giving its in-principal nod for the disinvestment of Air India.

Singh said despite the huge turnaround the airline had witnessed since it nearly shut down two-and-a-half years ago, it was not in a position to stake its claim on Air India.

"We are not very confident that we are strong enough to take on a gamble like Air India at this point of time," he told reporters here.

SpiceJet was recently lauded by US President Donald Trump during PM Narendra Modi's visit for its order of 100 planes with American aircraft manufacturer Boeing and the massive jobs this would create in the country.

The budget carrier has a fleet size of 55 aircraft, including Boeing 737NG and 20 Bombardier Q-400s. It has also placed a firm order for 175 Boeing 737 Max and 25 Bombardier Q-400s. The new aircraft will be inducted into the fleet from April next year and the process will continue for nearly eight years.

SpiceJet also serves 39 domestic and 7 international destinations and recorded a market share of 12.6 per cent in May.

However, the airline CMD said, "I feel SpiceJet is too small an airline to look at what is undoubtedly a good asset...it has the Air India brand itself".

According to global consultancy PricewaterhouseCoopers, Air India is an "excellent" acquisition target for an existing Indian airline seeking to expand as well for a new entrant into the aviation industry.

"It has a very large asset base, 120 aircraft with replacement orders for 43 already placed. Most importantly, it has the largest number of routes and slots and nearly 15 per cent domestic and over 17 per cent international market share," said, Partner - PwC India, Dhiraj Mathur, in a press statement.

He said Air India also has a "terrific brand name" and the government must insist the buyer retains it, a sentiment expressed by top officials in the Ministry of Civil Aviation, including Minister of State Jayant Sinha.

To a question on the plans to acquire wide-body aircraft for long-haul operations, Singh said, "There is conceptually a market there, but we are not confident of the economics of that (aircraft).
"We are studying it and sometime in the future, we will think about it," he added.