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SpiceJet Says Not Strong Enough To Take On A Gamble Like Air India

New Delhi:  No-frills carrier SpiceJet is not keen on buying out Air India as the private airline is “not strong enough to take on a gamble” although the national carrier is a “good asset”, SpiceJet Chairman and Managing Director Ajay Singh said today. Rival and market leader IndiGo has already written to the government showing interest to buy out Air India’s flight operations, particularly international services, after the union cabinet in-principle approved disinvestment of the national carrier.

InterGlobe Aviation Limited owns IndiGo; it has a market share of a little over 41 per cent. SpiceJet’s market share in May was 12.6 per cent.

Mr Singh said despite the huge turnaround SpiceJet saw 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 in New Delhi.

“I feel SpiceJet is too small an airline to look at what is undoubtedly a good asset… It has the Air India brand itself,” Mr Singh said.

On whether SpiceJet plans to buy wide-body aircraft for long-haul operations, Mr 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.”

SpiceJet operates 55 aircraft, including Boeing 737NG and 20 Bombardier Q-400s. SpiceJet flies to 39 domestic and seven international destinations.

When Prime Minister Narendra Modi was in the US, President Donald Trump had praised SpiceJet for ordering 100 aircraft from American plane-maker Boeing since the contract will create jobs in the United States.

The airline has placed orders for 175 Boeing 737 Max and 25 Bombardier Q-400s. The first lot of the new aircraft will be inducted into the fleet in April 2018. The purchase will spread over eight years.

According to consultancy firm PricewaterhouseCoopers, Air India is an “excellent” acquisition target for a domestic airline seeking to expand, as well for an entrant into the aviation sector.

“It (Air India) 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 Dhiraj Mathur, Partner in PwC India, said in a statement.

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