SpiceJet has entered into a memorandum of understanding (MoU) with Japan’s Setouchi Holdings to explore opportunities to acquire small amphibious aircraft to improve air connectivity to places that do not have airport infrastructure. The MoU is a statement of intent to work together on an exclusive basis for introducing Setouchi’s aircraft in India, Ajay Singh, Chairman and Managing Director, SpiceJet, told a select group of journalists. Excerpts from the interaction:

What prompted you to look at this aircraft?

I had used one of these aircraft in Dubai. It was interesting to note that this aircraft can land in water. This makes you think that in a country which is so constrained for infrastructure and there are so many small cities and towns where there is nothing like an airport can such places be provided with air connectivity...

Will this aircraft only be stationed in Assam?

No. The idea is to connect any part of the country. We think there is special importance for the North-East because connectivity here is incredibly poor. So many areas need air connectivity but there is none. In fact, there is not even a small airport or air strip.

We feel there is significant opportunity, let us say in the Andamans and Rajasthan for tourism. There are so many other regions where this aircraft makes sense, apart from the North-East.

What about the economics of this aircraft?

In terms of commercial viability an MoU has been signed (to study this project) . We are studying how we can bring the cost down to a level where at a reasonable fare you can fly people and make significant money. First, we have to ensure commercial viability of the project and that is what we are studying.

Earlier a Mumbai-based company tried operating sea planes and shut shop. How is this project different?

We have met with the authorities and they seem extremely enthusiastic. We do not think permission should be a challenge because if they can fly in other parts of the world there is no reason they cannot fly here.

Sometimes these kinds of projects fail in India because of lack of scale. People get in 2-3 planes and then it becomes really expensive. You need a scale of operations to get costs down and become economically viable.

Do you have any scale in mind?

If it is done it will be done in excess of a 100 aircraft. They have two variety of aircraft —10 and 14 seaters. There are some amphibians and others which are not.

For a 100 or more aircraft order how much funds will be required?

As we said during the time we ordered the Boeing aircraft there will be no dilution of equity.

Will the order size be a $1 billion or $1 million?

These are not expensive planes. The list price is close to $4 million.

Will these aircraft be purchased directly? Are they not available through the lessor model?

We have to study all the arrangements. There are lots of possibilities in today’s world when finance is not very difficult to get. We funded our Boeing planes for the first two years which was fairly easy to do. So we do not expect a great challenge.

Much as the Bullet train is being funded on cheaper sources of funds from Japan. We would certainly explore that possibility.

You mentioned the Bullet train but for that the Japanese Government has provided aid at a low rate of interest.

We will study all those possibilities.

So you do not ruling it out?

No. We have discussed this issue. We will study that possibility.

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