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India may buy 1320 new aircraft for $ 150 billion by 2031: Boeing

New Delhi. Boeing has predicted a strong, $150 billion market for 1320 new passenger aircraft in India over the next 20 years.

Boeing India President Dinesh Keskar says that according to his company’s estimates, India will witness a steady growth in civil aviation due to the rising incomes, people’s urge to travel, India’s growing economy and the resulting demand for international travel.

However, with two out of every three passengers opting to travel on a low cost airline in India, the period till 2031 will also witness further growth of budget airlines.

Cargo traffic will also rise steadily, Keskar said while releasing the annual Boeing’s Commercial Aviation Market Outlook for the next 20 years.

“Robust growth with new economic prosperity amongst a massive Indian population, discretionary incomes, business progress and access to airports will increase airplane demand,” Keskar said adding: “In 2011, the economy continues to do well. Indian air carriers are becoming profitable and we expect the GDP to maintain its upward trend in the long-term. As a result, both the air travel and air cargo markets will grow.”

He also highlighted the test flight of Boeing 787 to New Delhi and Mumbai, and then direct to New York to demonstrate the viability of the next-gen aviation technologies. Japan’s All Nippon Airways is the first to buy this aircraft, and Air India will get its first Dreamliner in the last quarter of this year.

Air India has ordered 27 new 787 Dreamliners for its long haul routes to ferry passengers direct from India to faraway destinations in the US and Canada. The aircraft is supposed to save a massive 20 per cent per seat mile per passenger, something which can swing the economies of most airlines using it.

Jet Airways has also ordered 10 787s, and the delivery of its first aircraft would be in 2014.

The arrival of the Boeing 787 in both the Indian cities, a couple of days after the release of the outlook, was accorded a great welcome. The test flight was part of the operational validation procedures by the US Federal Aviation Authority (FAA), without whose clearance the aircraft cannot be put into use.

Keskar observed that globally, Boeing forecast a $US 4 trillion market for new aircraft over the next 20 years with a significant increase in deliveries. The company saw a market for 33,500 new passenger airplanes and freighters between 2011 and 2030.

Passenger traffic internationally is expected to grow at 5.1 percent annual rate over the long-term and the world fleet is expected to double by 2030, he said, adding.

As for India, Keskar informed that passenger traffic, which has reached 53.6 million domestic (fiscal 2011) and 13.1 million international, is expected to grow at 8.1 percent annually over the long-term. “The economic and air traffic growth will in turn stimulate demand for a variety of aircraft types,” he said.

“The need is great for new airplanes that can efficiently and profitably fly short and long-haul routes. This demand is driven by growth in developing and emerging cities, demand from low-cost carriers and the need to replace an aging fleet.”

Keskar said the strongest demand will be for single-aisle aircraft. He predicted that airlines in India will grow by responding to passenger preference for more flight choices, lower fares and direct access to a wider range of destinations. Linking of small cities to both metropolises and other small cities is the demand of the day. Air carriers will focus on offering more flights using more efficient airplanes instead of significantly larger airplanes.

Boeing airplanes currently dominate India’s long-haul international fleet, with 777s and 747s in service, soon to be joined by the 787 Dreamliner.

“The super-efficient 787 will offer significant economic improvement for airlines, increased comfort for passengers and better environmental performance,” Keskar said.

“81 per cent of the demand and two-thirds of the total value would be for single-aisle planes in the market. Double-aisle planes will command 16 per cent of the demand space and three percent by regional jets. And this where the Dreamliner fits in,” he informed.

As for training of pilots for the Boeing 787, Keskar said,“The training of Air India pilots would begin next month. Intensive discussions have been held with the airline and the Directorate General of Civil Aviation (DGCA) on the training programme and type-rating of trained pilots.

”Not willing to comment on controversy with Air India because of the delay in delivery, Keskar said: “Air India will forgive us once they get the delivery, because the airplane will be a delight in terms of fuel efficiency, operational efficiency and cost effectiveness. If Air India is looking for a turnaround, Boeing aircraft are the answer. They can open new long-haul routes and operate with the highest efficiency without bothering about maintenance.”

Commenting on the share of the future growth Boeing is expecting from India, he said that Boeing products are well-entrenched in the Indian market for decades and are hopeful of gaining a major share of the future demand for new aircraft.

Boeing is upbeat about the Asia-Pacific market of aircraft. Out of 33,500 planes the world over, this region has 11,450 and of a global market value of USD 4060 billion, the region has a market value of USD 1510 billion, he informed.

Keskar also said that the much awaited setting up of the MRO at Nagpur with Air India has begun and that the contract was signed with infrastructure major L&T in December 2010. The construction to complete it should take about two to three years, a year or so to get all equipment in place and then some time for the DGCA to give its clearance.

This means that it will take nearly five years for the MRO to become operative.

Incidentally, according to DGCA, passenger traffic rose by 18 per cent in the first five months of 2011 to 24.5 million.

Keskar said that economic liberalisation in the recent years had significantly expanded the aviation industry in India and that market forces had led to some consolidation.

© India Strategic