Two of the world’s largest aircraft manufacturers – Boeing and Airbus – have both revised their 20-year market outlook for India stating that the country will see more aircraft sales till 2032 than what they had estimated in 2012. The upward revision in the outlook comes a day after SpiceJet placed a $4.4-billion aircraft order for 42 planes with Boeing and a month after Air Costa placed a $2.94-billion aircraft order for 50 planes with an option for 50 more with Embraer of Brazil.
As per Boeing outlook, between 2013 and 2032 Indian airlines will buy 1,600 aircraft valued $205 billion. Last year, Boeing had predicted that in the same period India would need 1,450 planes valued at $175 billion. Meanwhile Airbus also raised its outlook by a similar amount stating that between 2012 and 2032 India would need 1,290 aircraft valued at $190 billion. In 2012, its prediction for 2012-2032 was for 1,045 planes at $145 billion. The upward revision from the aircraft manufacturers comes on the back of favourable demographics in the country for growth in aviation and the low penetration of airline services in India currently, which leaves the room for potential exponential growth. “India’s demographics are highly favourable to the growth of air transportation,” said Mr D Keskar, senior V-P of Sales, Asia Pacific and India, Boeing Commercial Airplanes. “The share of India’s large population entering the workforce is growing. India could have the world’s fourth-largest economy if current trends continue helping drive demand for air travel.” Airbus’ EVP strategy and marketing said in a statement, “As the people of India fly more, demand for the latest generations of aircraft will also increase making India most dynamic markets in the world.” Both Airbus and Boeing predict that the bulk of the orders will be for single-aisled narrow-body aircraft like the Boeing 737 and the Airbus A320. Airbus says around 913 of the 1,290 aircraft from 2012-2032 will be narrow-body aircraft while Boeing says 1,330 of the 1,600 planes in its market outlook will be narrow-body planes.
According to Mr Keskar, Indian carriers have gone slow on the wide body orders since they have spent too much money fitting premium Business Class and First Class cabins which they haven’t been able to fill. “The dilemma for the Indian carriers is to get a right cabin configuration for the wide-body planes to make money,” he said. However, narrow-body planes where Airbus has a leading market share in India with Airbus A320, is still generating interest amongst Indian carriers. Boeing, which announced the SpiceJet order for 42 Boeing 737 MAX, a competitor for the Airbus A320, is also in talks with Jet Airways and Air India Express for the same aircraft, but Mr Keskar said nothing is confirmed yet. But while the 20-year projections show that aircraft manufacturers are bullish about Indian aviation’s long-term future, over the short term there are some concerns. Mr Keskar of Boeing warned that capacity discipline is currently breaking among Indian airlines. “In 2013, revenue passenger kilometres or the revenue paying passengers has grown only 3.5% while available seat kilometres or capacity increase has been 11.5%. This means that nearly a third of the additional capacity has flown empty,” he said. Mr Keskar’s point is validated when seen alongside the statistics from the Directorate General of Civil Aviation. In January 2014, Indi-Go, the largest Indian carrier by market share, had a load factor of only 70.2% as compared to 84.1% last January. The carrier that has been adding aircraft at the rate of nearly one aircraft per month, which meant that in January its available seat kilometres increased by 22.5% but its passenger growth was only 1.3%. Boeing’s presentation also pointed towards the real impact of the weak rupee against the dollar. Since 2008 to 2013, average ticket prices between Mumbai to Delhi has grown to $132 from $127 but in rupee terms the average ticket prices have gone up from Rs 5,008 in 2008 to Rs 7,012 in 2013. Nearly 80% of an airline’s costs in India are denominated in US Dollars.
http://timesofindia.indiatimes.com
Leave Your Comment