Premier Airways, a Chennai-based low-fare airline is in advanced discussions with European plane maker Airbus to buy 40 Airbus A320 neo planes at a listed value of $4.3 billion. If consummated, this will be the second biggest order in terms of value by a newcomer after IndiGo's 100 plane purchase in 2005 besides marking the entry of a seemingly serious player into India's highly competitive aviation industry.
The A320 neo (New Engine Option) is the latest upgraded version of Airbus' single aisle aircraft family . The latest list price of the plane, according to the manufacturer's official statement in January this year is $106.2 million. The actual deal value will, however, depend on discussions between Premier and Airbus and could come down after negotiations, given the size of the deal.
Premier got the aviation ministry's approval to induct the planes around October.It is now awaiting a nod from the Reserve Bank of India (RBI), post which purchase documents will be signed and pre-delivery payments structured. Going by Airbus' current order backlog for the A320 neo, Premier will likely get its first delivery only in 2019-20, if the deal is finalised.
Pinaghapani founded the airline company in 2005 but got the NOC (no objection certificate) from the aviation ministry only in July 2014. His Linkedin profile lists him as an Indian businessman based in the US who has over 33 years of industry experience, ranging from manufacturing, education, distribution, retail, finance and software consulting.
He started his career as an engineer in machining and tooling companies in Coimbatore and Chennai and spent 12 years as a lecturer in a polytechnic institute. In between, he co-founded Textek, a maker of automatic electronic flashes for automobiles as well as Emeral Granites, a manufacturer of granite tiles and slabs which were exported to the Gulf and Singapore.
Pinaghapani is hiring executives for the airline's top management. He has roped in Harish Moideen Kutty , former chief commercial officer of SpiceJet as its executive vice-president (commercial) and NP Puri as the executive vice-president (operations). Premier had plans to start operations during the summer of 2015, with leased planes but the source quoted above said it wants to approach the leasing market after finalising the aircraft purchase. It now aims to start in the last quarter of this calendar year or the first quarter of the next year.
The airline's entry will expand India's aviation market, one of the fastest growing in the world. Local air traffic is once again growing after month-on-month declines several times in 2013. Domestic air traffic grew 13.9% while international passenger numbers grew by 9%. Finances too, are improving for most Indian carriers. Fuel costs are down and carriers such as SpiceJet have turned profitable, while others such as Jet Airways have cut losses. Sydney-based CAPA Centre for Aviation said in a recent note that Indian carriers likely posted a loss of $1.25 billion in the financial year ended March 31, 2015. The quantum of losses is likely to decline by up to 40% in the current fiscal year.
A new carrier's entry will increase competition in a price-sensitive market where airlines have in the past indulged in suicidal price wars, selling below cost and often hurting their own margins. Also, while the government has been promoting regional connectivity , airport infrastructure growth remains slow, making many regional routes unviable and unprofitable.
The A320 neo (New Engine Option) is the latest upgraded version of Airbus' single aisle aircraft family . The latest list price of the plane, according to the manufacturer's official statement in January this year is $106.2 million. The actual deal value will, however, depend on discussions between Premier and Airbus and could come down after negotiations, given the size of the deal.
Premier got the aviation ministry's approval to induct the planes around October.It is now awaiting a nod from the Reserve Bank of India (RBI), post which purchase documents will be signed and pre-delivery payments structured. Going by Airbus' current order backlog for the A320 neo, Premier will likely get its first delivery only in 2019-20, if the deal is finalised.
Pinaghapani founded the airline company in 2005 but got the NOC (no objection certificate) from the aviation ministry only in July 2014. His Linkedin profile lists him as an Indian businessman based in the US who has over 33 years of industry experience, ranging from manufacturing, education, distribution, retail, finance and software consulting.
He started his career as an engineer in machining and tooling companies in Coimbatore and Chennai and spent 12 years as a lecturer in a polytechnic institute. In between, he co-founded Textek, a maker of automatic electronic flashes for automobiles as well as Emeral Granites, a manufacturer of granite tiles and slabs which were exported to the Gulf and Singapore.
Pinaghapani is hiring executives for the airline's top management. He has roped in Harish Moideen Kutty , former chief commercial officer of SpiceJet as its executive vice-president (commercial) and NP Puri as the executive vice-president (operations). Premier had plans to start operations during the summer of 2015, with leased planes but the source quoted above said it wants to approach the leasing market after finalising the aircraft purchase. It now aims to start in the last quarter of this calendar year or the first quarter of the next year.
The airline's entry will expand India's aviation market, one of the fastest growing in the world. Local air traffic is once again growing after month-on-month declines several times in 2013. Domestic air traffic grew 13.9% while international passenger numbers grew by 9%. Finances too, are improving for most Indian carriers. Fuel costs are down and carriers such as SpiceJet have turned profitable, while others such as Jet Airways have cut losses. Sydney-based CAPA Centre for Aviation said in a recent note that Indian carriers likely posted a loss of $1.25 billion in the financial year ended March 31, 2015. The quantum of losses is likely to decline by up to 40% in the current fiscal year.
A new carrier's entry will increase competition in a price-sensitive market where airlines have in the past indulged in suicidal price wars, selling below cost and often hurting their own margins. Also, while the government has been promoting regional connectivity , airport infrastructure growth remains slow, making many regional routes unviable and unprofitable.
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