Boeing raises forecast as Indian airlines rush to expand fleet

New Delhi: India’s airlines continue to pile up losses but the market outlook for the next two decades keeps improving nevertheless. India is already the fastest growing aviation market in the world and plane maker Boeing today raised forecast further to 1,740 new aircraft worth $240 billion in the next two decades as more and more Indians take to the skies. This is a significant increase from the 1,600 new planes it had forecast a year ago.[caption id=“attachment_2383712” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] Boeing says over 75 million Indians will fly on domestic routes in calendar 2015 against 66.4 million last year. But despite this vast increase in annual domestic air traffic, airlines continue to lose money largely on account of jet fuel being quite expensive in India. Boeing says prices in India are up to 60 percent higher than other countries and fuel accounts for upto half of an airline’s operating costs. Of those 1,740 planes, 84 percent of the demand will be for single-aisle aircraft such as Boeing’s 737 and the Airbus 320. Indian airlines are unlikely to buy the majority of those planes themselves and may lease them instead. Dinesh Keskar, senior vice president of Asia Pacific and India Sales, Boeing Commercial Airplanes, said today every Indian airline except SpiceJet added capacity till July 2015 versus July 2014. According to Boeing’s estimates, Air India hiked capacity by 7 percent, Jet Airways by 13 percent, IndiGo by 23 percent this July versus July 2014. But SpiceJet reduced capacity by 26 percent even as GoAir increased by just 2 percent. SpiceJet already has a large order of 42 Boeing 737 Max aircraft, deliveries for which begin in 2018. And it has begun talks with Boeing for another order of a 100 aircraft. Later this year, IndiGo will start taking deliveries of the 180 aircraft order it had placed with Airbus earlier; Air India will complete it order of 27 Boeing 787 Dreamliners too. In 2015, 10 airlines operate in India with about 340 aircraft in all. Boeing expects global airlines will need 38,050 airplanes over the next 20 years valued at more than $5.6 trillion. On SpiceJet order Will SpiceJet, an airline that has returned from the brink and continues to have large accumulated losses, be able to keep up with an ambitious plan to order 100 more aircraft as part of its long term fleet plan? Boeing’s Keskar said today that the airline had held talks with the plane maker and admitted that the 100 aircraft order is indeed ambitious. But he said Boeing has several checks and balances in place for assessing the ability of an airline to comply with the payments schedule. Keskar mentioned several practices at Boeing: It does not manufacture a plane more than 12 months in advance, takes advance payments for aircraft, assesses a customer’s ability to take on-time deliveries of aircraft while also continuously assessing the leasing market dynamics. He then went on to add that SpiceJet has posted profits for the last two quarters, the airline’s load factors are in the 90 percent range and he was confident the airline can take 100 planes over and above the 42 737 Max planes already on order.