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Op-Ed: Boeing Laments Mounting Losses By Indian Operators

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Op-Ed: Boeing Laments Mounting Losses By Indian Operators

Op-Ed: Boeing Laments Mounting Losses By Indian Operators
December 28
10:14 2018

It’s not every day that a senior executive of major aircraft manufacturer advises airline operators on their business strategy – what to do and what not to do! But a few days back, during his brief stop-over at New Delhi, Dinesh Keskar, the Senior Vice-President for Asia-Pacific and India sales at Boeing Commercial Airplanes, just did that.

“Double-digit growth, coupled with losses, is what I am concerned about. I will forego 2% to 3% growth for making money rather than filling up my airplane at rock-bottom prices and never making money,” stated Keskar during Boeing’s market outlook presentation in New Delhi.

Air India 777-300ER. (Credits: Jeremy Dwyer-Lindgren)

It may be noted that every Indian airline has been bleeding for the last 3-4 quarters due to many factors, including high crude prices and a weak rupee, but the situation got accentuated due to the competitive offering of cheap but unviable airfares.

In doling out his musings, Keskar may also be giving vent to his own worries about the Indian orders not fructifying as per plans.

Photo: PRNewsfoto/Boeing

This could be a matter of serious concerns for the world’s largest airframe maker as after being pushed behind by its traditional rival Airbus, was looking to catch up in the next 5-10 years (short-medium term) while its traditional customers in India, such as Jet Airways, Air India and SpiceJet were bouncing back and looking good enough to have an extended good run.

But last few miserly quarterly earnings reports from all its faithful customers could play spoiler. And Boeing’s customers here appear to be in for long haul financial quagmire, which may impact their ability to take deliveries as per schedule despite book-orders.

Boeing’s Counsel Reflects


Since 2005, when a new breed of LCCs came into the scenario in India, with focus on better operational efficiency and more seats to cater to burgeoning but extremely cost-conscious Indian travelers, Airbus had taken a lead over Boeing with its fuel-efficient A320 single-aisle 180 seat configurations.

The European maker had also doled out liberal payment terms to lure in more operators to its fold. And as luck would have it, it gained significantly with the dramatic rise of IndiGo Airlines while one of Boeing’s prime customer and one-time leader in the Indian sky ‘Kingfisher Airlines’ nosedived.

Photo: Konstantin von Wedelstaedt

The fact that Rakesh Gangwal, one of the two promoters of IndiGo had enjoyed excellent relations with Boeing since his days as CEO of US Airways in the late 90s, when the company had handed the biggest order ever for an American airlines to Airbus, also helped the latter regain a strong footing in the Indian sky.

Currently, in India, out of the approximately total 710 operational commercial aircraft, 615 are jet class planes, while the rest are turboprops.

Airbus accounts for 357 of jet aircraft (58%), while Boeing counts for 258.

But if one is to add the number of turbo-powered aircraft, the count for Airbus goes up, as an overwhelming majority of them are ATR turboprops, which is a 50/50 joint venture between Airbus and Italian manufacturer Leonardo.

On international long-haul front, however, Boeing is the preferred deployment.

Photo: Sean d’Silva

And with sizeable order flowing from Jet Airways (75 Boeing 737 MAX 8s), SpiceJet (107 Boeing 737-800s), Vistara (6 Boeing 787-9 Dreamliners), and its oldest customer, the national carrier Air India, pressing hard for fleet expansion, together with its worthy answer to A320neo (which has been plagued by reports of serious and frequent engine snarls) in the form of 737NG, things have been looking quite good for Boeing.

But with all of its prospective customers bleeding heavily due to excessive focus on gaining market share at any cost while offering unsustainable cheap airfare, the future may not be as promising as expected.

Nonetheless, Boeing sees a larger number of future aircraft orders from India than Airbus.

While Boeing estimates that India will need around 1,750 new passenger and cargo aircraft over the next two decades, Boeing has forecasted that Indian airlines will add up to 2,300 new planes worth USD $320 billion by 2037. Certainly, Boeing sees a brighter opportunity in Indian sky.

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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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