Boe­ing raises forecast for In­dian plane de­mand

The Pak Banker - - COMPANIES/BOSS -

US plane maker Boe­ing Co. ex­pects a de­mand for 1,740 planes in In­dia over the next 20 years, an­tic­i­pat­ing that more peo­ple will travel by air over the course of time. The price tag for these planes is es­ti­mated at $240 bil­lion.

In its an­nual Cur­rent Mar­ket Out­look (CMO), re­leased on Wed­nes­day, Boe­ing raised its pre­dic­tion for air­craft de­mand by 8.75% com­pared with 2014's forecast. In March 2014, Boe­ing said air­lines in In­dia will need 1,600 new air­craft, val­ued at $205 bil­lion, in the next 20 years. In­dian air­lines to­gether have around 400 op­er­a­tional planes and around 500 on or­der.

"In­dia's econ­omy and the coun­try's po­ten­tial for air travel growth-both for leisure and busi­ness-con­tin­ues to be strong and we re­main con­fi­dent in the In­dian com­mer­cial aerospace mar­ket," said Di­nesh Keskar, se­nior vice-pres­i­dent of Asia Pa­cific and In­dia Sales, Boe­ing Com­mer­cial Air­planes.

The num­ber of pas­sen­gers car­ried by do­mes­tic air­lines dur­ing the six months ended June stood at 38.3 mil­lion com­pared with 32.4 mil­lion in the year-ago pe­riod, an in­crease of nearly 20%, latest of­fi­cial data show. The strong­est de­mand from air­lines in In­dia will be for sin­gle-aisle planes such as the next-gen­er­a­tion 737 and the new 737 MAX, Boe­ing's out­look pre­dicts. Much of this de­mand comes from low-cost car­ri­ers that are pro­jected to hold more than 30% of the to­tal In­dian avi­a­tion mar­ket to­gether over this 20-year pe­riod, Boe­ing said.

IndiGo, SpiceJet, AirAsia In­dia and GoAir are the lo­cal low-fare air­lines. "The In­dian mar­ket is highly com­pet­i­tive and air­lines are adapt­ing with added ca­pac­ity, mod­er­ate pric­ing dis­ci­pline and new busi­ness mod­els, such as the grow­ing num­ber of low cost car­ri­ers," said Keskar. IndiGo, In­dia's largest air­line by pas­sen­gers car­ried, flies sin­gle-aisle planes of A320 made by Air­bus SAS, while coun­try's sec­ond-largest low­fare air­line SpiceJet Ltd flies B737 planes.

World­wide, Boe­ing ex­pects a de­mand for 38,050 new planes over the next 20 years. In­dia will ac­count for 4.5% of this de­mand. "Given the un­der pen­e­trated na­ture of the avi­a­tion in­dus­try in In­dia, it's quite pos­si­ble that the mar­ket can dou­ble ev­ery 6-7 years (which is a 12-13% growth per an­num). The higher GDP (gross do­mes­tic prod­uct) growth rate for In­dia that is be­ing forecast over the next few years will help achieve this num­ber very easily," said K.G. Vishwanath, an in­de­pen­dent con­sul­tant.

If lower crude oil prices sus­tain, en­trylevel ticket prices will re­main in check and bring new en­trants into the mar­ket, Vishwanath added. "There­fore, the need for another 1,000 to 1,500 air­planes over the next 20 years is pretty much a con­ser­va­tive es­ti­mate," he said. In 2014, ri­val Toulouse-based plane maker Air­bus pre­dicted In­dian air­lines will re­quire 1,290 new pas­sen­ger air­craft, val­ued at $190 bil­lion, by 2032.

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