Irrational pricing of airline tickets in India and the current financial health of the domestic airlines are a matter of concern for the US-based aircraft manufacturer Boeing.

“Irrational pricing is a matter of concern. Indian fares are roughly 10-15 per cent lower than you can break-even even though the fuel prices have come down and the exchange rate has come down. If operation wise you are losing money you can do it for a little while. The low fare yields need to be addressed because in my opinion they cannot sustain forever. We hope, just like over the years people have found solutions, this too will be dealt with,” Dinesh Keskar, Senior Vice-President, Asia Pacific and India Sales, Boeing, said.

He said the issue of airlines not doing well financially is not new as the same had happened in 2008, 2009 and 2010 when domestic airlines reported significant losses. “But still the orders kept coming. (Aircraft) orders do not get delivered for two years or more. If you do not order at the right time you are going to miss the boat as you will not be able to get market share. The intuition is that there should be a co-relation between losses and reduced orders but unfortunately it is not there. We hope good times will come in terms of lower fuel prices and exchange rates,” Keskar said.

Meanwhile, Boeing estimates that India will need 2,300 aircraft valued at $320 billion in the next 20 years ending 2037. India continues to grow at a pace faster than the world, a Boeing official said. He added that the number of aircraft India will require is the highest ever.

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