Domestic airlines curtail fleet expansion plans | Economic Times

Mumbai: India’s airlines are sharply curtailing their fleet expansion plans as the Covid-19 pandemic saps demand for travel and pushes prospects of a recovery to next year.Carriers are likely to take delivery of not more than 25 planes for the year ending December, less than a third of what they were collectively scheduled to get, said several people aware of the matter. This includes 10-15 planes already inducted, they said.Market leader IndiGo will take the majority of the planes, although at a slower pace than its rate of one plane every week last year/ A handful of aircraft, including one Boeing 787 Dreamliner, will likely go to Vistara. AirAsia India, GoAir and SpiceJet may not take any fresh aircraft deliveries in 2020.India’s passenger airlines operate a combined fleet of 650 planes. Last year, Airbus and Boeing delivered about 70 planes to airlines and several more were leased by carriers.AirAsia India CEO Sunil Bhaskaran said the airline has frozen its expansion plans for this year. Vistara chief strategy officer Vinod Kannan told ET the airline is in talks with Airbus and Boeing to defer deliveries.Vistara has inducted a Boeing Dreamliner 787 plane and two leased Airbus A320 aircraft into its fleet between January and March 2020. It couldn’t take delivery of its second Dreamliner in March as the country went into a lockdown.SpiceJet is awaiting deliveries of Boeing 737 Max planes, which is back in production after a year of being grounded after two crashes.IndiGo, SpiceJet and GoAir didn’t respond to ET’s queries.Discussions are ongoing and will change entirely if demand increases later this year, a senior IndiGo executive said. “There are a lot of moving parts,” the executive said.“Also please remember, it brings a lot of much-needed cash to Indian airlines if they can sell and leaseback planes. Also, all airlines would want to get the new upgraded versions of planes such as the Airbus A320 Neo and Boeing 737 Max for more cost-effective operations in these times,” said a senior executive at a leasing company.Airlines across the world, especially low-cost carriers, finance aircraft by selling it to a lessor at a premium immediately after it’s delivered. They then lease it back and pay monthly rentals. The premium from such aircraft sales shores up their finances and at times, even profits.Indian carriers had to ground 650 planes on March 24 when all operations were suspended as part of the nationwide lockdown to prevent the spread of the Covid-19 virus. They grappled with a no-revenue situation for two months before being allowed to resume operations in a calibrated manner.There has been a small spurt in demand from flyers wanting to get to their home towns from distant cities, helping airlines to fill less than half of their flights. Demand may fall in the next few weeks once everyone gets back home as people avoid non-essential travel.