Boeing raises forecast for Indian plane demand

Mumbai: 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 low-fare 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, entry-level 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. About 73% of these will be for fleet expansion and the rest for replacement of older planes, it said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.