Airlines - Crystal Gazing

“Boeing expects a rebound in the Asia-Pacific region driven by India’s future needs. Asia Pacific is going to lead the growth of aviation sector... Demand for smaller aircraft will grow and for large aircraft will shrink as these do not have a home in this market.”
—Dinesh Keskar, President, Boeing India

Aerospace major Boeing Forecasts that the Indian market will require 1,000 commercial jets in the next two decades—corresponding to more than 3 per cent of Boeing Commercial Airplanes’ predicted global market share, thereby making India a $100 billion (4,86,190 crore) market in 20 years. Boeing India President Dinesh Keskar shared the company’s market data and forecast focused on Boeing’s analysis of India’s commercial airplane market.

Recent market forces and recession in many parts of the world have led to a contraction of India’s commercial aviation sector, with consolidation of airlines and an overall reduction of capacity. Nonetheless, Keskar said India’s projected GDP growth over the next 20 years will average 6.5 per cent annually, driving a resurgence of demand and capacity growth for the country’s airlines. Boeing’s customers in India include Jet Airways, Air India and low-fare carrier SpiceJet Limited. The number of commercial passenger planes in India has grown from 122 in 2003 to 330 in 2009, with 350 currently on order. The slowdown has shrunk corporate traffic globally by 20 per cent and economy travel by 9 per cent. However, Keskar sounded a positive note saying, “Boeing expects a rebound in the Asia-Pacific region driven by India’s future needs. Asia Pacific is going to lead the growth of aviation sector.”

“Demand for smaller aircraft will grow and for large aircraft will shrink as these do not have a home in this market.” Keskar further stressed on the success of smaller aircraft by budget carriers in India. Boeing estimated that India would need at least 770 small aircraft in the next 20 years. The company expects almost 77 per cent of the aircraft deliveries to be single-aisle, while the B-747 and larger planes are expected to contribute only 1 per cent of the total order.

Airlines are approaching break-even with decreased domestic capacity and rational pricing, according to the Boeing outlook. On the Mumbai-Delhi sector, for instance, in August 2008 the needed fare was $192 (9,345), but the typical fare was $122 (6,000). In June 2009, the breakeven fare was $106 (5,160), but airlines were charging an average of $86 (4,186).

Keskar said 2009 could be the best year for Indian carriers, but at what point the airlines start making money remains to be seen. “India is on a much better footing. Because of this its recovery should also be faster, unlike in the US. India should see an upturn in the fourth quarter of this year,” he said.