The Hindu Business Line : No Boeing deliveries to India till end-2010

“For Air India, three Boeing 777s being built will be delivered late next year. The remaining three that were ordered have been deferred. We have not heard of any cancellations. They will get 787s (Dreamliners) towards the second quarter of 2011, by which time we expect Air India to recover from the crisis,” he added.

Jet Airways, he said, would get planes only in 2011 and “the markets should revive by then”.

For 2009, Boeing’s forecast is that the Indian market will require 1,000 commercial jets valued at around $100 billion over the next 20 years. This represents over three per cent of commercial aeroplanes’ market worldwide, according to Boeing’s forecast.

Spate of orders

According to Boeing India’s Web site, in 2006, Air India made an order of $11 billion for 68 aircraft, considered the largest commercial order in India’s civil aviation history.

Jet Airways has an order for ten 787 Dreamliners. Placed in December 2006, the order is valued at over $1.5 billion at list prices. The airline has also finalised an order for 20 737-800, valued at nearly $1.5 billion at current list prices, in 2007.

In 2007, Jet also announced exercising options for three 777-300 ER (Extended Range) airplanes. Valued at more than $790 million at list prices, this order follows a previous one for 10 777-300ERs in September 2005, for a combined 13 777-300ERs.

In 2005, SpiceJet placed an order for 20 Boeing 737-800 planes. It placed a firm order for ten, valued at $630 million at list prices, and had options for ten more. In 2006, the New Delhi-based carrier announced that it had converted its ten options into an order for five 737-800s and five 737-900ERs.

The order is valued at over $700 million at list prices.

At the time of placing these orders, India was seeing a spurt in air travel. With the entry of low-cost carriers, passenger air traffic was at a peak and it looked as if good times were here to stay. However, the 2008 global recession coupled with high oil prices and a fall in demand only resulted in the new planes (ordered over the last few years) becoming a huge liability for Indian carriers. There were not enough passenger loads, leading to high operating costs and lower revenues.

IATA caution

Though things seem better now, the International Air Transport Association (IATA) cautions that though passenger demand was up 0.3 per cent in September, it was “largely due to comparisons with an exceptionally weak 2008”.

IATA’s Economic Briefing for October 2009 states (based on surveys with airlines), “The outlook for passenger traffic over the 12 months ahead is improving, with 60 per cent now expecting increases over that period. On a weighted average basis, the outlook for passenger demand for the 12 months ahead is 73.3 – well up on July’s first foray back above the ‘50’ no change line. This is consistent with a continuation of the recent rise in passenger numbers.”

Mr Keskar was confident that things would look up in the Indian aviation market. The financial performance for December-March should be good, he said, as yields are looking to pick up.

“Post-Diwali, the air traffic momentum has grown. In addition, we have maintained that carriers will break even if they sell (tickets) at around Rs 4,600 to Rs 4,700. Today, the cheapest fare available on Delhi-Mumbai sector is about Rs 5,000 inclusive of taxes,” he said.

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