With airlines staring at a loss of $1.5 billion in India, the question is will the airlines stick to the order book or the glacier is just about to melt. None of it, says Boeing's Dinesh Keskar.

In a conversation with Manisha Singhal, he said, if airlines get the efficiencies correctly there is no reason for worry and his company is still bullish on the Indian market in the long term. Excerpts.

This crisis is unique. During the earlier low cycles, we had either to deal with problems confined to higher costs or the lower margins. It is for the first time that both the factors have coupled with an economic slowdown.

The travel sentiment is down and people want to save money. No industry can survive if you do not balance the demand and supply.

Has there been any deferment or cancellation of current orders in India?

We are not getting any indications of deferment of deliveries from our buyers. We have a disciplined selling after a through homework. Our deliveries are in batches and financing and deployment plans are sorted out well in advance.

We have plenty of gap for our next batch of deliveries both for Air India and Jet Airways. We have helped the low-cost carrier SpiceJet in getting interested parties for sublease contracts for its immediate deliveries.

Do you think the low-cost carrier model has been the cause of the crises in the industry?

The current crisis will bring about a business model differentiation. There was an artificial stimulation of demand, which was the result of airlines' irrational pricing in India.

Now is the time when there will be actual business model differentiation between a full service carrier and no frills carrier as it is being realised that there is no such thing as low-cost airlines.

The 40 per cent growth figures for aviation is not the real demand for the domestic market. The real demand will now come out.

As an aircraft maker, what will the impact of the downturn?

We have customers wanting airplanes and have a healthy backlog of 3,600 aircraft. If the oil prices are soaring further, there will be a demand for more fuel efficient aircraft like the 787s, which are 20 per cent more fuel efficient.

Also, we will have to come up with newer models that require less maintenance intervals. The future for aviation is that the whole world will require smaller and more efficient airplanes for point-to-point travel.

Have you re-looked into your forecasts of the Indian market after the slowdown?

This is not the time for airlines to talk about booking new orders. There were discussions when we had forecast airlines in India would need 60 flights over the next 10 years beyond 2012. But if we were talking about an order size of 60 earlier, now it is between 25-30 for airlines in India.

Do you see overcapacity in the domestic aviation market? Is there a need to cut capacity?

Airlines in the country will have to cut existing capacity by at least 10-12 per cent in order to tide over the current crisis. The airlines in the US are cutting capacity approximately by 10 per cent and have grounded nearly 400 airplanes.

In India, airlines are yet to do something like this, but sooner than later they will have to address the issue of excess capacity. They might also looking at redeployment of excess capacity on other routes or may be other markets.

What do the airlines now do in India to tide over the crisis?

Airlines in India will have to run the business more efficiently, there is otherwise no way out.