Saturday, September 30, 2017

SpiceJet To Boeing: Dreamliner Too Expensive For Low-Cost Long-Haul Success

Fast-expanding SpiceJet has issued a stark warning to Boeing about the 787 Dreamliner, insisting that the next-generation plane is too expensive to catalyze demand in the low-cost long-haul (LCLH) market.

Chairman Ajay Singh says he sees merit in the LCLH business model pioneered by Norwegian Air Shuttle, but only if ownership costs come down for airlines.

“It’s a pricing issue,” Singh tells me. “As a concept I think there is potential in this low-cost long-haul business. But to make the fares lower and to offer it profitably, you need to ensure that your costs are significantly lower. And, at the price points at which these aircraft are today, we find that’s a bit of a challenge.”

India is the fourth-largest aviation market in the world and should triple in size to 442 million passengers a year by 2035, according to industry group IATA. Much of this growth will come from long-haul international traffic, with low-cost carriers IndiGo and SpiceJet seeking to win back market share from the Persian Gulf super-connectors.
IndiGo announced this summer that it wants to participate in the privatization of Air India by turning the flag-carrier’s international operation into an LCLH offering.
29/09/17 Martin Rivers/Forbes