Low-cost leaders IndiGo and SpiceJet are looking to wet lease widebody aircraft to fly to Europe. According to sources at the Economic Times, both carriers are looking to lease A330s to fly to London. SpiceJet might be the first to start such flights, with reports saying it has already leased one Oman Air A330 along with the airline’s Heathrow slot. So, why have the two low-cost airlines decided to go long-haul at this time?
Why now?
Both IndiGo and SpiceJet have toyed with the idea of flying to Europe before, using either widebody aircraft or stopovers. However, neither airline has decided to bite the bullet and break from its low-cost roots. It seems the current pandemic has changed their minds, with both airlines now aggressively considering long-haul plans.
There are a few reasons as to why both airlines are pursuing European flight now, especially those to London. Vande Bharat, India’s repatriation mission, has opened up new potential routes for airlines. However, one destination that continues to be underserved, both before and during the pandemic, is London.
Since the beginning of Vande Bharat flights in May, Air India has struggled to keep up with the demand from London, adding new flights to every phase of the operation. Since May, the carrier has flown over 70 flights to London, with more scheduled.
It’s become clear that London, and other European destinations, have plenty of demand from India. The long-haul, international market is still recovering from the collapse of Jet Airways a year ago, which has left room for direct flights from India. With British Airways and Virgin Atlantic unable to fly to India, and the lucrative fall season coming up, do IndiGo and SpiceJet have a chance to gain market share?
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Wet leasing a smart choice
It is clear that there is a high demand for direct flights between India and Europe, but the finances of long-haul flying can be complicated. While most low-cost airlines make money using a single fleet and high load factors, full-service carriers rely on premium cabins and return customers.
Wet leases are an appealing middle ground. In a wet lease, an airline or charter company provides its aircraft and crew to the leasing airline for operations. Airlines usually wet lease aircraft when they require additional capacity or if their planes are grounded.
The current global health crisis has hit airlines hard, with many putting fleets in long term storage. Oman Air has likely parked its fleet too, allowing its widebodies to be leased to other carriers. The wet leasing contract will be a financial boost to Oman Air, with reports estimating that SpiceJet could be paying up to $267,500 (₹2 crores) per day for the A330.
Wet leasing allows for short term and flexible contracts, meaning airlines are not bound to the plane. However, wet leasing is an expensive proposition, which makes it essential that airlines fully consider the risks before taking the aircraft. If these airlines do want to fly to Europe in the short term, wet leasing is likely the best option.
Developing plans
According to sources, the Indian government is encouraging IndiGo and SpiceJet to jump into the long-haul game. The government’s stance is to promote Indian carriers over the dominant Middle East three, which have a large share of the market. By offering direct routes from India, these low-cost carriers could cut into the market share of connecting airlines.
While details of the plans are yet to emerge, we know that SpiceJet is in talks to wet lease up to three A330s from Oman Air (it is unknown if it is the -200 or -300 variant). IndiGo is also planning to take three A330s, although the provider remains unknown. Oman Air has also given SpiceJet one of its expensive Heathrow landing slots, giving SpiceJet access to Europe’s busiest airport.
In the coming weeks, we can expect more details about SpiceJet and IndiGo’s plans, including the type of aircraft they will be flying. For now, SpiceJet will likely offer a two-class configuration on the Oman Air A330s (cabin size will vary depending on the aircraft variant). The business class cabin could prove attractive during COVID-19, with passengers wanting more personal space.
Competition
While it seems everything is lining up well for the low-cost carriers to go long-haul, there are some potential hurdles. Air India currently holds a monopoly over flights to the UK and has a vast schedule of daily services. Private carriers will have to face off against the flag carrier, who have more slots and planes.
Additionally, IndiGo and SpiceJet will also have to compete with British carriers once the travel bubble with the UK is finalized. Both British Airways and Virgin Atlantic fly to multiple Indian cities, adding competition (it is unclear which airline will get permission). While specific dates are yet to be announced, the travel bubble will likely come sooner rather than later.
IndiGo and SpiceJet’s plans to jump into the long-haul market is definitely an ambitious one. The low-cost, long-haul market is a lucrative one, but one which is also notorious for driving airlines bankrupt.
While there is pent-up travel demand for flights to and fro Europe, it is unclear how long this will last. Airlines such as Vistara are also looking to London for their long-haul plans, further increasing competition on the route in the future. For now, IndiGo and SpiceJet might finally offer India’s first low-cost options to travel to Europe. If they will survive, is yet to be seen.
What do you think about SpiceJet and IndiGo’s plans? Would you fly the low-cost airlines on long-haul flights? Let us know in the comments!
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