Jet leases out 3 B-777s aircrafts to Thai Airways

After keeping three of its Boeing aircraft on ground for several months, legacy carrier Jet Airways has finally been able to lease them out to Thai Airways.
Industry sources said the full service carrier will earn a rent of over $3 million (around Rs 140 crore) every month from the lease deal.

On Thursday, the leading domestic airline by number of passengers carried announced it had signed an agreement with the Southeast Asian airline to dry-lease three B-777-300-ERs (extended range) for three years.

The company had already dry-leased four B-777-300-ER aircraft to Turkish Airlines.

An industry expert said the move indicates that the airline industry is still facing cash crunch and cannot invest in developing new international routes. “They are not able to run the bigger aircraft like the B-777s profitably. There is also a serious cash crunch in the industry even today and so it makes better sense to lease or ground them (aircraft) than to operate them,” he said.   

According to sources in the industry, Jet had kept the B-777s grounded for several months and was scouting for the airlines that could lease them.

A senior executive of an airline said operating a B-777-300-ER, which has capacity of over 300 seats, requires huge cash. He said it was difficult to get enough passengers on the international routes, which are crowded with many foreign airlines already operating on them.

“Jet Airways had to pull out its B-777 operated flights on Shanghai and New York routes only because they were incurring huge losses on them. It was more economical for them to keep the aircraft on ground,” he said.

Last year, Air India lost Rs 2,000 crore on 30 international routes, most of which were operated by the Boeing 777. Jet’s move is part of its strategic fleet and capacity rationalisation initiatives. Ankur Bhatia, managing director of Amadeus, said the Naresh Goyal-owned airline had taken the easy way out by leasing its aircraft.

“Today, it is not easy to develop international routes. It takes huge capital investment and time. Also, they still have excess fleet capacity. Instead of keeping it (aircraft) on ground, leasing them out makes better economic sense,” he said.