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India's Air One Aviation is seeking $2 billion of jets to take on Singapore Airlines' venture in the country, stoking competition in a market where carriers lost almost $10 billion in seven years.
Air One, among six companies that last month got initial approval to start airlines in India, is looking at Airbus Group's A320s and Boeing Co's 737s, its director Alok Sharma said in an on Wednesday. At list prices, 20 Boeing 737-900 ERs cost $1.98 billion, though airlines typically get discounts.
"You can't start with one plane and wait for another six months to get the next one," Sharma said in his office near New Delhi's airport, adding Air One plans to provide full-service flights from mid-2015. "The launch will be decided by availability of aircraft in a contiguous manner." Sharma, undeterred by one of the world's costliest aviation markets, said he sees growing demand for air travel and reduced capacity as some airlines in India are struggling. Singapore Airlines, partnering with the Tata Group, plans to fly its full- service Indian venture Vistara this year, while AirAsia India began operating a low-cost carrier in June.
Sharma, who ran Sahara Airlines before it was sold to Jet Airways in 2007, said his experience in Indian aviation gives him an edge as he charts a path to profit. Air One currently offers charter services.
Boeing India declined to comment on the potential order from Air One. An Airbus spokesman in New Delhi didn't answer two calls to his mobile phone.
A320s identified by Air One earlier were snapped up by Tata-SIA Airlines, Sharma said.
Premium segment
Vistara is leasing 20 A320 planes from BOC Aviation, the Singapore-based aircraft leasing unit of Bank of China Ltd. It plans to start a premium carrier which will take on state-run Air India and Jet Airways India, which recently said it will scrap its low-cost venture.
"The beauty of BOC was they had very good 20 positions, which any airline will take and run with," Sharma said. "There are no such positions available with a single lessor now, but it's just a matter of mapping." The business travel market in the $1.9 trillion economy is Asia's fastest growing and projected to double by 2015, according to the Global Business Travel Association.
Indian carriers have lost a combined $9.8 billion over the past seven years, Sydney-based consultancy CAPA Centre for Aviation estimated in May. Over that period, airlines lost an average $22 every time a passenger stepped on board, according to CAPA.
BUSINESS IN THE SKIES
- Air One is among the six companies that got initial approval to start airlines in India last month
- At list prices, 20 Boeing 737-900 ERs cost $1.98 billion, though airlines typically get discounts
- According to CAPA estimates in May, India carriers have lost a combined $9.8 billion over the past seven years
