NEW DELHI — Two years ago, SpiceJet Ltd. was fighting for survival as creditors retreated and oil companies refused to refuel its airliners. Today, the world’s biggest planemakers are wooing the recovering Indian budget carrier for a potential order worth about $12 billion.
Boeing Co. and Airbus Group SE are locked in a battle to supply SpiceJet with up to 100 planes, and both are offering aggressive discounts in negotiations that have intensified in the past few months, according to people with direct knowledge of the talks, who asked not to be identified as the discussions are private.
A win would be key for Boeing, with the US manufacturer lagging behind its European rival in India’s burgeoning budget-airline market, one of the key sources of industry growth globally. Segment leader IndiGo and the local units of Singapore Airlines Ltd. and AirAsia Bhd., which fly only Airbus jets, have squeezed Boeing’s prospects in a market where air travel is growing at a pace faster than in China or the United States.
“Losing SpiceJet would be a big blow to Boeing,’’ said Amber Dubey, a New Delhi consultant at KPMG. SpiceJet chairman Ajay Singh “knows this and hence is perhaps having interesting conversations with both.’’
The Indian discount airline needs to ramp up its 43-plane fleet quickly to pose a meaningful threat to IndiGo, which controls 38.5 percent of the market and flies 108 aircraft. IndiGo’s owner, InterGlobe Aviation Ltd., has placed orders for 430 Airbus A320neo planes, with a target to build a 1,000-jet fleet.
A SpiceJet spokesman confirmed Singh is attending this week’s Farnborough Air Show in England, but declined to say whether an order announcement is imminent. Boeing said in an e-mail that it will continue to work with SpiceJet to meet its needs.
“Airbus enjoys 70 percent market share in India and most Indian carriers are growing their business with us,’’ said Airbus spokesman Justin Dubon. “We’d be delighted to help SpiceJet too.’’
Bombardier Inc., which is enjoying a revival with its C Series narrow-body jet starting service and winning a benchmark deal with Delta Air Lines Inc., is in a separate race for more than 50 smaller planes SpiceJet is buying. The Canadian aircraft producer will be competing against Brazil’s Embraer SA and the Avions de Transport Regional, or ATR, joint venture of Airbus and Italy’s Leonardo-Finmeccanica SpA.
At least eight budget carriers dot the skies of India, where air travel grew more than 20 percent last year, according to the International Air Transport Association. Passenger traffic in China rose about 10 percent and less than 5 percent in the United States, the IATA said.
But India poses risks, with some carriers failing due to taxes, tariffs, and low fares. As many as 17 airlines have shut down in the past two decades. Accumulated losses of operating airlines have reached $8.9 billion, according to KPMG and the Associated Chambers of Commerce of India.
