‘We see India as a very promising aviation market’

European aircraft maker Airbus is pushing hard to expand its presence in India — both in terms of selling more civil aircraft and sourcing more from the country. In an interview with BusinessLine , Airbus India Managing Director Srinivasan Dwarkanath,and Chairman of the Airbus Group Material Board Olivier Cauquil share their plans for the country.

Is the forecast that you have made for the country independent of what is happening in the airline sector in India? After all, most airlines aren’t in their pink of health…

One normally takes a long-term view of the aviation growth of a country. Globally, air traffic is said to double every 15 years. In a growth country like India, it’s expected to double in lesser time. The Government, in fact, says Airbus is quite conservative in its forecast and we hope they are right. There is a direct correlation between the GDP growth and air traffic. Having said that, in some years, there will be challenges and some hiccups. In the long-term, we see it as a very promising market.

If one looks at the forecast, which was made when the open skies policy was announced in the 1990s, there still seems to be some gap…

If you look at the growth during the last five to seven years, we have been revising our forecast, more upwardly. There are at least 100 factors that one takes into consideration while making a forecast and they are more long- term than immediate ones. We are confident about the forecast and they are doable.

What is the forecast for the next 20 years for India?

I think it’s about 1,300 aircraft for the next 20 years and a majority of them would be single aisle, which will be about 930; widebodies will be 300; and 50 will be very large aircraft of the size of A380s.

What is the backlog of orders with Indian carriers?

With IndiGo, it’s about 430; for Vistaara, it’s about 20; and GoAir 72. There are a few Air India leased ones. So in all, about 530. During the fourth quarter, we expect to deliver 12 A320 Neos, which includes delivery for IndiGo as well.

How has 2014 been for Airbus, globally?

We have about 1,800 gross orders and 2014 has been the best for Airbus so far. We have beaten the competition. In terms of delivery, we have made a record 629 deliveries. Overall, we have sold over 8,000 aircraft and there is a backlog for 6,355. So, this is a very healthy backlog for the next 10 years.

A380 is an excellent aircraft for the end customers. Every day, about 50 A380s of Emirates take off from the Dubai airport. Emirates CEO Tim Cark loves our aircraft and he insists every airline fly the A380s. We are trying to focus on how to make incremental innovation for our customers on the A380s. About 30 years back, our competition didn’t take us seriously. We don’t want to make that mistake. Different airlines expect different things from the aircraft. We are looking at adding one more seat to the 10-in-a-row without sacrificing space.

Are any of the airlines in India looking at placing orders for A380s? Does one need to make any changes in the airport to handle the A380 traffic?

We are talking to all airlines here. If you look at the trunk routes, A380s do make sense even on domestic trunk routes. This also means that one can look at A330s as well as A350s. As far as airports are concerned, just a few adaptations are needed and a lot of airports are ready to do that. You know, the interesting thing is deployment of A380s on some of the busy trunk routes can be quite profitable for the airlines in India.

With the amount of outsourcing that happens here, do you still consider India as a low-cost destination?

There are three or four factors that come into play while taking a decision on outsourcing. First it’s the learnability, second the CTC (cost to the company) and cost of the machines and then cost of the capital. When you go up the learnability curve, lot more innovation happens. In India, in a jugaad sort of mentality, they don’t repeat the same process. They really want to innovate. So, when there is a cost increase on the labour, this is compensated by an increase in productivity. On an average, even till 2050, cost of labour will be substantially lower than other Western countries. There is really a cost competitive potential for the country. So it is not low-cost, but cost competitiveness which is a combination of taking out unnecessary costs and innovative ways of working.

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