Supply chain issues to hit aircraft deliveries for Indian airlines: Report

Aircraft deliveries to domestic airlines are likely to be impacted amid the supply chain challenges being faced by aircraft and engine makers, a report said on Wednesday.

In its report, credit rating agency Icra said Indian airlines have a total order book of around 1,700 aircraft, which is more than double the size of the current fleet.

Supply chain challenges and engine failure issues remain the headwinds in the near term, Icra said in its mid-term outlook on the domestic aviation industry.

"The deliveries, however, are likely to be gradual, spanning over the next decade, and will also be impacted by the current supply chain challenges encountered by engine and aircraft Original Equipment Manufacturers (OEMs)," it said.

India is one of the fastest-growing civil aviation markets and domestic air traffic is on the rise. Airlines have also embarked on ambitious expansion plans to cater to the increasing travel demand.

Since February last year, Akasa Air, Air India and IndiGo together have placed orders for 1,120 planes.

In January this year, Akasa Air placed an order for 150 Boeing 737 Max planes. In 2023, Air India and IndiGo together placed orders for 970 planes with Boeing and Airbus.

Tata Group-owned Air India ordered 470 planes -- 250 from Airbus and 220 from Boeing -- in February last year. Later in June, the country's largest airline IndiGo announced an order with Airbus to buy 500 narrow-body planes.

However, Boeing is grappling with issues related to its 737 Max aircraft while engine maker Pratt & Whitney is facing problems with its engines.

According to Icra, a large part of the 1,700 aircraft order book is towards replacement of old aircraft with new fuel-efficient ones.

"More recently, the Indian aviation industry has been affected by engine failures and supply chain challenges. This has resulted in grounding of aircraft for select airlines, thus impacting overall industry capacity (as measured by Available Seat kilometres or ASKMs)," Suprio Banerjee, vice president and sector head for corporate ratings at Icra, said.