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August 19, 2006

Planes, planes and more planes

At the 2005 Paris air-show, low-cost airline start-up made a splash by announcing an order for 100 Airbus aircrafts. Businessworld has an interview with IndiGo co-founder and former US Airways CEO Rakesh Gangwal in which he talks about the mega order. (IndiGo has launched flights starting August 4).
It is a firm order for 100 aircraft, with no options. One, for a start-up airline to order 100 planes — it’s the first in aviation history. Two, for all aircraft to be firm orders is equally unheard of. We’ve to take delivery of all, else there are penalties. There are enormous flexibilities built into the deal because the marketplace changes. You may want to induct planes faster because the market has picked up, or defer them due to a slowdown. We have a 10-year contract. That’s too long a time. We hope to take all sooner.

Business Today has an update on this year's large airplane orders.
After last year's $13 billion splurge at the Paris air show and another couple of billion gone into further orders at the Dubai and Singapore exhibitions, the Indian aviation sector was expected to take it easy at the biggest air-show this year at Farnborough in the UK. But last fortnight, when Airbus sent out a press release, congratulating the Wadia group-promoted GoAir for buying 10 more A320 aircraft at an estimated list price of $600 million (Rs 2,820 crore), it became clear that the buying binge had in fact only just begun. Kingfisher Airlines' top honcho Vijay Mallya too was on a signing spree ensuring that Airbus put an A320 in Kingfisher colours on display at the show. For good measure, the UB group Chairman also ordered $400 million (Rs 1,880 crore) worth of engines from Pratt & Whitney and booked three full-flight simulators for $24 million (Rs 112.8 crore). Mallya reportedly is also keen to buy the all-business transatlantic carrier MAXjet. And then there was Flyington Freighters' audacious $1 billion (Rs 4,700 crore) order for four Boeing 777 Freighters.

Business Today also traces the folks behind Flyington Freighters:
The promoters of the freight carrier are the same as promoters of the Deccan Chronicle group. When Business Today tried to contact T. Venkatram Reddy, Chairman, Deccan Chronicle Holdings, it was informed that he was still at the air show. According to sources, the Boeing aircraft will arrive starting 2009, but the company hopes to begin operations this year with three leased Airbus A300 aircraft.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.