India needs 1,740 new airplanes, says Boeing

Airlines in India will need 1,740 new airplanes valued at $240 billion over the next 20 years, leading aircraft-maker Boeing has said.

According to Boeing's latest forecast, 1,460 or 84 percent of these aircraft will be single-aisle while wide-body aircraft will account for 15 percent.

Dinesh Keskar, senior vice president, Asia Pacific and India Sales, Boeing Commercial Planes, told reporters at India Aviation 2016 here on Thursday that Boeing is developing new fuel efficient airplanes to address the needs of its customers such as those in India.

He said that while India domestic passenger traffic is at highest levels over past five years, fuel prices and the exchange rate continue to drive the airline operating costs and profitability.

Keskar believes lower fuel prices and increased load factors are driving industry recovery and the Indian domestic market is returning to profits. He, however, said exchange rate remained a worry with the rupee declining steadily since mid 2014.

"Increased traffic, reduction in operating costs, and fare discipline will drive India aviation profitability," said Keskar while pointing out that India domestic passenger traffic is at the highest levels.

More than 80 million domestic passengers flew by air in 2015 against 66.4 million in 2014. The recovery in domestic passenger traffic started with 2014. Domestic passengers increased by 21 percent in 2015.

Keskar said it was not just good growth but profitable growth. He, however, called for increased fare discipline to ensure that the industry continues to grow with profitability.

Stating that lower fuel prices and increased load factors are driving the recovery of industry, he said there was 39 percent reduction in break even fare over last three years.

According to him, a relatively stable rupee with decreasing fuel prices reduces break-even fares.

He noted that while fuel prices have decreased 53 percent from October 2013 peak, Indian carriers still pay over 50 percent more for fuel than the US carriers.

He said fuel as a percentage of operating cost came down from 49 percent in January 2013 to 23 percent in February 2016.

"Fares have decreased with fuel cost but at a slightly slower rate," he added

Keskar also noted that landing and navigation fees are growing as proportion of operating cost. The landing fee in India is lower than that in Europe but higher when compared with the North America and the Latin America.

Stating that Boeing met its Maintenance, Repair and Overhaul (MRO) commitment in India, he said the state-of-the-art facility built in Nagpur has been handed over to India.

The MRO has the capacity of two A777 size wide body aircraft and six 737 size narrow body aircraft.