A Boeing Co. 787 Dreamliner aircraft operated by Air India. (Photographer: Dhiraj Singh/Bloomberg)

Aero India 2019: Boeing Flags Risks To Aircraft Demand In India

Boeing Co. has flagged risks that could slow down demand for planes in one of the world’s fastest growing aviation markets.

Increase in jet fuel prices, exchange rate going up at fast pace and a slowdown in airport development could derail the growth of aircraft makers in India, Dinesh Keskar, senior vice-president, sales, Asia Pacific and India, at Boeing, told BloombergQuint on the sidelines of Aero India 2019. All this could be problematic, he said, adding that it is crucial for India to step-up the game in infrastructure development. “Mumbai and Delhi airports, which account for 60 percent of the traffic, are saturated. You can’t get another slot.”

Boeing had said last year that India would need about 2,300 airplanes valued at $320 billion over the next 20 years. It also projected a worldwide demand of 42,700 aircraft during the period, with Asia-Pacific accounting for 40 percent.

India is seeing the fastest growth in the world and accounts for 5 percent of the total sales, Keskar said. But hyper competition is already bleeding domestic carriers, with two of Boeing’s biggest clients—Jet Airways (India) Ltd. and Air India—under financial stress. Nobody is making money and that is not a good growth model, he said. “For the industry to remain sustainable, it is important for some kind of growth.”

Keskar remains optimistic though. “We have seen worst and have managed it.”

Order Book

The U.S. plane maker says it has a healthy order book for India, “For 737 Max, we have 225 on order from Jet Airways, 155 from Spice Jet. Of those, only 25 have arrived in India,” he said, adding that the existing orders will be delivered in five to six years. He expects orders for its soon-to-be-launched 777X as a replacement for Air India and Jet Airways once their situation stabilises.

787 Dreamliner Vs Airbus 330 Neo

Airbus, which featured its new A330 Neo at the Bengaluru air show, is priced similar to A320 but can fly longer and has more seats. It competes competes directly with Boeing 787 Dreamliner.

Keskar said Airbus’ only edge in the segment is pricing, and there is no comparison. “Ours is more advanced, flies faster, has 30 percent lower maintenance cost and 15 percent less fuel burn,” he said.

Watch the entire conversation here: