The Hindu Business Line : Airbus doubles projection of aircraft requirement from India

Capt. G.R. Gopinath, Managing Director of Air Deccan, with Mr John Leahy, Chief Commercial Officer of Airbus Industrie, at a press conference in Bangalore on Tuesday. - G.R.N. Somashekar

Bangalore , Dec. 21

AIRCRAFT maker Airbus Industrie said on Tuesday that India will require around 400 aircraft by 2019, of which it expects to have a share of over 50 per cent. India's estimated requirement is about double the number of aircraft it had projected last year.

Airbus Industrie's Chief Commercial Officer, Mr John Leahy, told newspersons that the growth of the low-cost airline in India and expansion plans of existing players would constitute most of the aircraft purchases.

Airbus Industrie already has 30 firm orders for A320s from Air Deccan and 18 from Kingfisher Air. Mr Leahy expressed the hope that Airbus would be able to clinch the Indian Airlines deal for 43 aircraft before the first quarter of next year. Another big order is expected from Air India, which plans to float a request for proposal for the acquisition of nearly 50 aircraft sometime next year.

The deal with Air Deccan involves a total of 37 aircraft, of which two will be from a previous contract, five on a lease basis and the rest from the new contract it signed on Tuesday.

The delivery of these Airbuses will begin from September 2005. The ticker price of acquisition of 30 A320s is around $1.8 billion.

Air Deccan may buy more: Air Deccan's Managing Director, Capt G.R. Gopinath, said his airline may acquire another 25 aircraft, once the current acquisition is completed. He said the airline, which has entered into a deal with Capital One and ICICI VF for raising $40 million, might go for another round of funding worth $10 million. Both these agencies will get 13 per cent each in the parent company, Deccan Aviation.

He said the new acquisition would be funded mostly through guarantees from a European export credit agency. While the European agency will stand guarantee for 85 per cent of the acquisition cost, the rest will be raised through Air Deccan's own funds and some local banks.

There are at least six financing agencies, including Standard Chartered and the Barclays who normally fund acquisition of aircraft. While 85 per cent of the acquisition cost will be on a rate of London Inter-bank Offer Rate plus 75 basis points, the rest will be LIBOR plus 300 basis points.

Capt Gopinath said Airbus bagged the contract ahead of other competitors because of the generous product support, which the aircraft maker agreed to give. All the A320s will have 180 seats and will be powered by V2500-A5 engines.