IndiGo gains on regulatory nod to wet-lease 11 A320 aircraft
On September 14, the shares of Interglobe Aviation Limited increased by 0.5 percent to reach Rs 2,460 in early trading. This rise came after the aviation major received approval from the Directorate General of Civil Aviation to wet-lease 11 A320 aircraft, as reported by CNBC-TV18, citing inside sources.
In the aviation industry, a wet leasing arrangement, as defined by the Federal Aviation Administration (FAA), is a contractual agreement where the owner of an aircraft provides not only the aircraft itself but also at least one crew member as part of the package. Under this arrangement, the owner takes on full operational responsibilities, which encompass a range of crucial tasks. These tasks include ensuring the aircraft’s maintenance, securing the necessary insurance coverage, and fulfilling all legal obligations associated with aircraft operations.
For Interglobe Aviation Limited, receiving approval for engaging in wet-leasing arrangements carries significant implications and benefits as the company seeks to expand its fleet and operations. Firstly, it offers the airline increased fleet flexibility, enabling it to swiftly expand its capacity without the extended lead times and financial commitments associated with purchasing or leasing aircraft outright. Moreover, by outsourcing operational responsibilities to the aircraft owner, the airline may effectively manage operational costs and reduce the need for in-house maintenance and crew management.
Another advantage is the ability to respond rapidly to fluctuations in passenger demand, seasonal variations, or specific route requirements. This agility empowers the airline to adjust its fleet size in alignment with shifting market conditions. Additionally, wet leasing can mitigate risks by transferring certain operational and maintenance-related responsibilities to the lessor, enhancing the airline’s risk management capabilities.
Furthermore, wet leasing can facilitate the airline’s entry into new markets, allowing it to launch new routes and serve additional destinations that might not have been feasible with its existing fleet. Overall, the approval for wet-leasing represents a strategic move by Interglobe Aviation Limited to address its fleet requirements, manage operational challenges, and bolster its operational flexibility. It enables the airline to access additional resources while remaining committed to delivering safe and reliable air travel services to its passengers.
This marks the second instance this year in which the Gurugram-based budget airline, IndiGo, has sought wet-leased planes to augment its fleet. Earlier in the year, IndiGo added three wide-body B777 aircraft on lease from Turkish Airlines. These additions were made to address the rising demand from passengers traveling to Istanbul and beyond.
The decision to expand its fleet through wet leasing comes at a crucial time for IndiGo, given the impending engine recall by Pratt & Whitney (P&W). IndiGo has been grappling with persistent engine issues related to Pratt & Whitney engines. The parent company of Pratt & Whitney, RTX, has issued a statement indicating that a significant number of aircraft worldwide may face grounding over the next few years due to these engine-related problems. As a result, IndiGo is taking measures to ensure operational continuity and passenger service quality amidst these challenges.
RTX, the parent company of Pratt & Whitney (P&W), has provided an update regarding the inspection and removal of engines used in the Airbus A320neo aircraft. According to this update, approximately 600 to 700 engines that are currently powering the A320neo fleet will be removed from service by early 2024. This represents a significant number of engines that will be taken out of operation.
Earlier in the same month, RTX had already announced its plan to remove 200 engines. The majority of these additional engine removals are slated to occur throughout 2023 and the early part of 2024. This decision is a response to the ongoing engine issues that have affected these engines and their reliability.
The removal of these engines underscores the challenges faced by airlines operating A320neo aircraft, as they grapple with the need for engine inspections, repairs, and replacements to ensure the safety and reliability of their fleets. It also highlights the efforts being made to address these issues and maintain the airworthiness of the A320neo fleet.
The ongoing supply chain challenges and engine issues have had a significant impact on the operations of the Gurugram-based airline, IndiGo. As a result, the airline has been forced to ground approximately 40 of its aircraft. This grounding is particularly noteworthy when considering that IndiGo operates a total fleet of 316 planes.
Of these 316 planes, a substantial portion—136 of them—are equipped with Pratt & Whitney engines. This reliance on Pratt & Whitney engines has raised concerns about the airline’s operational capabilities. The engine-related challenges, including the need for inspections, repairs, and replacements, have placed a strain on IndiGo’s ability to maintain its flight schedules and meet passenger demands.
Grounding such a significant portion of its fleet has undoubtedly created operational and logistical challenges for IndiGo. The airline has been actively seeking solutions, including wet-leasing additional aircraft, to mitigate the impact of these engine issues and ensure that it can continue to provide reliable and uninterrupted services to its passengers.
