Dubai: Airbus won an order of about $15 billion (Dh55.09 billion) for 180 of its A320s from Indian low-cost carrier IndiGo. Of these 150 are the A320NEO variant.
The airline signed up as the launch customer for the engine upgrade variant of the A320. Toulouse, France-based Airbus launched the programme last December after more than a year studying the option and expects a firm order from IndiGo within two months.
"This order for industry leading fuel efficient aircraft will allow IndiGo to continue to offer low fares," said Rakesh Gangwal and Rahul Bhatia, co-founders of IndiGo.
"Ordering more A320s was the natural choice to meet India's growing flying needs. The opportunity to reduce costs and to further improve our environmental performance through the A320NEO were key to our decision."
A320NEO, as the upgraded aircraft is called, stands for new engine option that brings 950km more flying range and two tonnes more payload than the original and largest selling single-aisle aircraft for Airbus.
The first deliveries are expected in 2016, the manufacturer said.
"The discounts and concessions Airbus would have had to give IndiGo will be nothing short of breathtaking — for the airline to assume the risk of being launch customer comes at a high price," said Saj Ahmad, London-based airline analyst at FBE Aerospace.
The Indian carrier has submitted a proposal to launch 15 international routes in the third quarter of this year after it completes five years of domestic operations, a mandated duration by the Indian government for a carrier to fly on international routes. The launch service would be to Dubai, Bangkok, Singapore, Kathmandu, Jeddah, Maldives, Abu Dhabi and Sharjah. "IndiGo had implemented its strategies in a very systematic manner; the airline had its government approvals to procure the new aircraft in the first quarter of 2010," said John Siddharth C.P, aerospace and defence analyst at Frost & Sullivan.
Key players
One of the key players in the low-cost segment, IndiGo operates an A320 fleet with a current market share of about 17 per cent in the domestic market, where passenger traffic is expected to cross the 55 million mark this year. "This deal is of strategic importance to Airbus due to two major reasons. The first is that IndiGo is the first customer of A320NEO and it has ordered about 150 aircraft; the second reason is that Airbus has tapped a major portion of one of the most potential global markets."
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