Friday, April 06, 2018

India’s airlines are buying 1,000 new planes, but that still won’t be enough

In February, domestic air travel demand in India grew twice more than the global average, and the country’s airlines are gearing up for a further rise.

Jet Airways, India’s second-largest airline (by market share), informed the Indian exchanges (pdf) on March 03 that it had agreed to buy 75 new Boeing 737 MAX planes. This would take the airline’s total order book to over 150 aircraft, though the company hasn’t specified a timeline.

Vistara, a joint venture between Singapore Airlines and the Tata Group, is reportedly looking to buy 60 planes. IndiGo, the country’s largest airline, wants to add an eye-popping 450 in eight years.

These orders total to around 1,000 aircraft over the next eight years (pdf).

However, according to American aircraft manufacturer Boeing’s estimates, India will actually need double that number of planes in the next 20 years. Its rival Airbus is a little conservative, pegging the number at around 1,750 by the year 2038. Going by these projections, Indian airlines currently seem short of the requirements.

After all, in financial year 2018 alone, the sector grew nearly 20% in terms of passenger traffic, with industry estimates showing that the trend is likely to continue. Over 117 million Indians travelled by air in 2017, nearly double from six years ago.
“You look at the average traffic growth in the last 10 years…you will understand the need for about 2,500 aircraft over the next 20 years because the economy is also growing. So you can assume that the traffic growth will continue,” said Dhiraj Mathur, partner at PwC India.
06/04/18 Anwesha Ganguly/Quartz India