SpiceJet does a deal with Wilmington as a new state airline emerges

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By TESTCustomwebLP TESTCustomwebLP March 23, 2015 19:45

SpiceJet does a deal with Wilmington as a new state airline emerges

SpiceJet has entered into settlement agreement with lessor Wilmington Trust SP Services (Dublin) Ltd. Under the agreement, the lessor has agreed to withdraw court proceedings and de-registration process of three aircraft subject to SpiceJet satisfying the (not disclosed) terms of settlement. At the same time SpiceJet was in the Delhi High Court today trying to overturn the recent court order directing the DGCA to de-register the AWAS aircraft that are held by the airline outside of agreed lease terms. SpiceJet sought an urgent hearing on the matter in front of justices B.D. Ahmed and Sanjeev Sachdeva and were successful as the matter was directed for a full hearing. SpiceJet is playing the public interest card, its only remaining recourse.

As matters stand the AWAS aircraft should be deregistered within days as the DGCA has no basis to prevent the de-registration of the same. The DGCA should also then allow the aircraft to be extracted from India by lessors.

So as the SpiceJet saga rolls on and more and more lessors are placated with working capital generated by forward bookings on seat sales being pushed their way, what is the last thing the Indian airline market needs right now? Yes there is to be a new state-backed carrier!

Air Kerala will be fully owned by the south Indian state of Kerala and will fly domestic routes from November 2015 followed by international routes starting with connections to the UAE and Saudi Arabia where a Kerala diaspora of some 2m exists.

Air Kerala will be the only Indian airline to be owned directly by a state government, the same people who set ATF taxes and control almost all major direct costs for airlines. Kerala is also perhaps one of the key tourist centres in India, especially for domestic tourism, so there is a great deal at stake. It is estimated that some US$11.6bn of annual cash inflow to the Indian economy is generated by the 2.3m total diaspora from the state of Kerala.

This on paper sounds like a wonderful airline to do business with. It has a fantastic domestic and international market at its fingertips and it has state backing. What more could a business partner such as a lessor ask for?

This airline could be a threat to Jet Airways in the future if all goes to plan and the Kerala government is likely to sell stakes to private individuals and foreign airlines at speed once the airline is up and running with the state only expected to retain some 26% over the long term. The scrapping of the 5/20 rule in India will allow this airline to grow at speed and, who knows, the state may be willing to seek out Qatari investment before long.

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By TESTCustomwebLP TESTCustomwebLP March 23, 2015 19:45