Indian Airlines set to ramp up capacity by next year: Boeing

Planemaker Boeing Co expects Indian airlines to increase capacity by at least 25% over the next year as demand recovers rapidly in the world’s fastest-growing major market, an executive said on Thursday.

In the longer term, Boeing expects an annual capacity increase of 7% in India, better than other high-growth markets.

Boeing forecast that airlines in South Asia will order 2,345 aircraft in the next 20 years to keep up with demand, India’s estimated growth rate in air traffic will average 6.9% a year through 2040. That rate is higher than the 5.5% projected for Southeast Asia and 5.4% for China.

India will witness the highest air traffic growth in the next two decades, US aerospace major Boeing said.

Indian skies are dominated by low-cost carriers (LCCs) including IndiGo, SpiceJet, GoFirst and AirAsia India, with the majority of them operating Airbus narrowbody planes.

“We predict that airlines will recover quickly and add 25% or more seats to the market annually.”

Dave Schulte, Director of Regional Marketing at Boeing Commercial Airplanes.

Boeing dominates India’s widebody market but fare wars and high costs have led to casualties among full-service carriers, including Kingfisher Airlines in 2012 and Jet Airways in 2019, making LCCs and Airbus even more dominant.

But India’s newest budget carrier Akasa Air and new owners Tata Sons at Air India and the Jalan-Kalrock consortium at Jet Airways are giving the U.S. planemaker hope of clawing back share in the Indian market as they eye more plane orders.

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Akasa has 72 Boeing 737 MAX planes on order.

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Boeing’s biggest customer in India, SpiceJet plans to induct more MAX planes into its fleet even as it struggles to make timely payments to vendors and lessors, prompting some of them to deregister and take back planes.

“I certainly expect more widebody orders and I expect more narrowbody orders from India. Almost 2.3 crore people travel by trains and 3.6 lakh by air daily in India. Just a 1% swing from train to plane doubles the aviation market.”

Salil Gupte, Boeing India president.

The loss-making airline has 155 MAX jets on order but has been slow in adding planes to its fleet even after the aircraft was cleared for flying by the country’s aviation regulator last year following a global ban sparked by two deadly crashes.

Boeing is very bullish on the country’s potential.

However, Indian airlines face some major concerns which were highlighted by the US major also, the Jet fuel prices in India are 90% higher than in most other regions, then the major costs of Indian carriers are dollar-denominated which hurts badly when the rupee falls against the dollar, thereby increasing the airline costs. And finally, Indian airlines have the “lowest average fares for similar distances and demands.”

While the aisle market in India is dominated by Airbus with its in-style A320 household plane. Boeing may try to bring more narrow-body planes to the market. It has attracted some customers such as Akasa Air which placed a huge order of B737 MAX planes.