Budget Airline IndiGo Pits Boeing Against Airbus In Record Jet Order Talks

By Aditi Shah and Tim Hepher

DELHI/PARIS (Reuters) - Indian budget carrier IndiGo is in talks with both Boeing and its current supplier Airbus to order more than 500 passenger jets, potentially smashing an industry record set by domestic rival Air India a few weeks ago, industry sources said.

India's largest airline has until now been an exclusive buyer of narrow-body jets from Airbus and French Finance Minister Bruno Le Maire said last month that IndiGo was close to ordering several hundred planes from the European planemaker.

But negotiations to keep renewing the budget carrier's fleet from the end of the decade have also broadened to include mid-sized wide-body jets, sparking a contest between Boeing's 787 Dreamliner and the upgraded Airbus A330neo, the sources said.

IndiGo, owned by InterGlobe Aviation Ltd, is also comparing the A320neo with the Boeing 737 MAX as it weighs a major new order for narrow-body jets, they added. The split between wide- and narrow-body jets was not immediately clear.

An IndiGo representative told Reuters the airline is constantly in talks with manufacturers as it plans its next phase of growth. "However, we haven't finalised anything till now."

Airbus declined to comment on any talks, saying it is "always in contact with existing and potential customers". Boeing had no immediate comment.

IndiGo, which counts a 55% share of the domestic market, is widely expected to maintain Airbus as its supplier of narrow-body jets to squeeze out further economies of scale.

It is already one of Airbus's largest customers and has so far ordered a total of 830 Airbus A320-family jets of which 488 are still to be delivered.

But Indian analysts say Airbus will face a tougher fight for the wide-body order. In a departure from its single-aisle strategy, IndiGo last month began international operations with a Boeing 777, its first wide-body aircraft, taken from codeshare partner Turkish Airlines, which provides the pilots.

RECORD DEMAND

Efforts by Indian carriers to keep pace with the world's fastest-growing aviation market, serving what is soon to become the largest population, have sent industry records tumbling even though manufacturers are struggling to meet output goals.

Tata-owned Air India last month sealed deals for a record 470 jets from Airbus and Boeing and plans to lease another 25 for immediate needs, bringing the acquisition to 495 aircraft.

The head of budget airline Akasa Air told Reuters last month it would place a "substantially" large order for new narrowbody jets this year on top of an existing Boeing 737 MAX order.

Industry publication CAPA reported last month that IndiGo was looking at around 500 jets as Air India closed its own deal.

Indian aviation has been hobbled in the past by airline failures, weak infrastructure and questions over the rights of foreign leasing companies that step in to finance the sales.

While analysts have warned the market could overheat again, Dublin-based Avolon, one of the largest lessors, has said consolidation and airport upgrades have improved the outlook and India is set to remain a major source of growth.

Indigo began operations in 2006 and flies to more than 75 Indian cities including to remote destinations in the country's northeast. It also flies internationally to nearby places including Dubai, Singapore, Hanoi and Maldives and is expanding into Europe through its partnership with Turkish Airlines.

(Reporting by Aditi Shah, Tim Hepher; Editing by Kirsten Donovan)

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