Not reducing India aviation forecast yet: Boeing

Despite Indian carriers suffering losses topping Rs 10,400 crore in fiscal 2012/13 and a slump in demand for air travel, US aircraft maker Boeing has not downgraded estimates for commercial airplanes required in the Indian market in the long term.

"Indian market requires 1,450 new commercial jets, valued at about $175 billion, over the next 20 years and we are not reducing that forecast," Dinesh A. Keskar, Senior Vice President, Sales, Asia Pacific & India, Boeing told Business Today on the sidelines of a media interaction.

But Keskar said Boeing is carefully studying the performance of the market and "will see about the next year".

"There are significant losses from the carriers in the results traded on the stock markets and we clearly see the adversity is higher," he said.

Boeing said airline losses in India are primarily on account of factors that are not in control of the airline companies.

"We tackled it (reason for losses) and we have understood why? The why (for airlines not making money) is the fact that fuel price today is an all time high and the exchange rate has affected the airlines. Forty per cent operating cost of an airline is in fuel and when it continues to grow bigger along with the rupee hitting lower levels, airlines have very little leeway," the Boeing executive said.


Keskar said the only choice for airlines in India is rationalising the fares but the challenge is how not cede market share to rivals who do not reduce fares.

"Load factors for carriers is 70 per cent so there are lot of empty seats flying and it is not that everybody is going full and the performance of Indian airline companies is not greatest right now," he said.

But Keskar said there are already signs of the sector showing some improvement. The third quarter bookings are good and at a higher yield. If airlines choose capacity strategically - as done by Jet Airways in deploying 10 aircraft from the domestic market on to international routes - this will help the entire sector.

Another important observation the Boeing senior executive made is that the traffic cycle is India is flattening with the variation in number of air passengers flying in peak versus non-peak times is not that high.

But Keskar was not too forthright on answering the troubles that Air India is having with its Dreamliner aircraft, as Boeing's 787s are called. The national carrier's turnaround plan hinges on the new jets.

"We are looking into the issue. And you hear only about three incidents but not seeing how much revenue they have earned by operating those nine airplanes," he said. The Boeing is working on the 97 cent reliability of the aircraft. "We want it to reach 99 per cent which is not a challenge for Boeing," Keskar added.

Boeing is fighting a battle of turf for the Indian market with its European rival Airbus. Keskar said new players coming into the market - for instance, Singapore Airlines, Tatas and Etihad - is a clear signal to the rest of the world that this market is one that will grow with promise of return on investment. He will be pitching to Singapore Airlines for selling Boeing airplanes in November, he added.