India’s airlines order huge numbers of airplanes

April 5, 2018, © Leeham News: India is one of the fastest-growing aviation markets in the world, with airlines there ordering a massive number of airplanes for their size.

  • Jet Airways announced a firm order for 75 Boeing 737 MAXes after this article was written.

Airbus and Boeing are selling hundreds of airplanes to India’s fast-growing airlines.

The most prominent airlines have nearly 1,000 airplanes on order. The leading, and most profitable, low-cost carrier, Indigo, is now considering ordering up to 50 twin-aisle aircraft for its first foray into long-haul, LCC service, in competition with the perennial loser, Air India.

It’s also one of the most challenging aviation environments. The government has policies that make it difficult for carriers to operate efficiently.

There have been a number of airline start-ups that make competition fierce. There have been a lot of airline failures.

Market demand

Boeing last year forecast a demand in India for 2,100 aircraft through 2036, an increase from 1,850 the year before. This represents 5% of Boeing’s global forecast.

Boeing sees a demand for 1,780 single-aisle airplanes, which includes a mere 10 regional jets, and 310 twin-aisle airplanes.

LCCs in India account for 60% of the traffic, Boeing notes. India’s traffic is growing at a rate of more than 20% per year, compared with a global rate of 7%.

“Today, three out of four people in India fly on LCCs,” says Dinesh Keskar, SVP for Asia-Pacific and India for Boeing. He said there are two distinct travelers, one wanting the full service of the mainline carriers and the other wanting the bare-bones cost of LCCs.

By 2050, India and China will be the world’s top two economies, Boeing says.

The Airbus forecast is more conservative. Airbus predicts demand for 1,750 airplanes through 2036. About 430 of these will be twin-aisle aircraft. Airbus does not forecast regional jets.

It believes India will become the third largest aviation market by 2019/20.

Airbus claims 70% of the backlog and 60% of the in-service fleet. Indigo drives much of this data.

Littered with dead airlines

India is littered with airlines that either died or seem to be in perpetual financial straits.

In recent years, Kingfisher Airlines is the highest profile casualty of the fickle Indian environment. Founded in 2005, it grew quickly—too quickly—to become India’s second largest airline. It placed large orders for Airbus aircraft, including the wide-body A330 and A380. By 2012, it accumulated more the US$1bn in losses. By the end of the year, the government suspended the airline’s operating certificate. It’s founder and principal owner, Vijay Mallya, fled to London to avoid criminal charges and debtors.

During its early years, Kingfisher bought the failing Air Deccan to achieve mass in the domestic market. (A new airline using the Air Deccan name began operations in 2017.)

Air India is perpetually in financial turmoil. Jet Airways and SpiceJet also have their struggles. Etihad Airways bought a large shareholding in Jet as part of its strategy, itself turning out to be ill-fated, to extend its reach in India. (Etihad also bought shares of airlines in other regions.) Etihad itself is now in financial turmoil.

SpiceJet had a string of losses through 2015, finally turning a profit in 2016 and 2017 for the fiscal years ending March 31.

Air Costa, a regional airline, lasted four years before ceasing operations in 2017. Its demise is particularly bad news for Embraer: Air Costa ordered 50 E195-E2s. EMB has no other announced customers for the airplane.

Indian Airlines, which was Air India’s main domestic competitor, was merged into Air India, but the combination didn’t help the surviving company improve its financial performance.

Top airlines

There are nearly three dozen operating passenger, cargo and charter airlines in India, according to a list in Wikipedia.

Of the top seven airlines, six are LCCs and the seventh is Air India. Five of the seven account for nearly 80% of the orders from Airbus, Boeing, Bombardier and ATR. Indigo by far has the largest backlog. GoAir is a distant second.

Indigo is the largest airline in India, by a wide margin, with a 39.5% market share through last year, according to data provided by Go Air at the Airfinance Journal annual conference in Dublin in January.

LCC Jet Airways is second and legacy carrier Air India is tied for third with LCC SpiceJet.

Air Asia (India), a recent entrant into the market, has a meager 4.5% share.

Fleet choices

Indigo appears gearing up to challenge Air India on international routes. Officials recently said they are considering acquiring up to 50 Airbus A330neos, likely a mix of orders and options. A deal, especially if it includes the 8,150nm A330-800, will be a boost for the slow-selling A330neo. The A330-900’s advertised range is 7,500nm.

“In India, there have been boundaries drawn about who is with who,” Dinesh told LNC during an interview on the sidelines of the first delivery of the Boeing 737-9 MAX, to Lion Air. “Our customers Air India, Jet Airways and Spice Jet. We have other airlines that are still operating that can go either way.

“I think the type of aircraft is something the airline will decide,” he said.

Indigo will make its call, but Dinesh—not surprisingly—believes the 787 is superior to the A330neo.

“I won’t say we are competing for Indigo, but we have the right airplane,” he said.

The “boundaries” are informal and not government policy, says a person close to Indian aviation, speaking anonymously in order to speak freely.

19 Comments on “India’s airlines order huge numbers of airplanes

  1. Can see this type of projected demand in India but the question is how the growth curve will look.

    The real question for me is will infrastructure keep pace with demand that is further stimulated by competing airlines buying large fleets and offering seats at low prices?

    India is known for periods of challenging flying conditions, part of infrastructure is air traffic control, navigation, etc.

  2. I’m especially interested in Boeing’s ‘forecast’ of only 10 regional jets. Given that the Civil Aviation ministry is putting in palace a regional connectivity incentive scheme, should there not be good prospects for Bombardier/ Embraer/ ATR going forward?

    I further second Anton on the issues of the actual development of airport infrastructure that can cater for all the passengers expected and planes on order…

  3. Air cargo oin India can be huge considering their road network and problems of trucking cross country.

      • Yes, I am a fan of Grand Victoria Station in Mumbai . Still the indian rail network is pretty crowded with surburbian trains.

        • India has about half the US rail tkm. That is nothing to sneer at ( keeping the economic and geographic differences in mind. EU moves just 1/3rd via rail)

          • The US rail system is almost fully private and carry few pax in a pretty slow fashion hauling cargo and storing materials like plastic beads in wagons to be hauled to the industry using them.
            The amount of electrification is low. It was designed during another time when working people lived in cities and the interstate system was not as developed.
            Lots of people in India commute on train to/from work and those commute/ regional trains fill the tracks pretty well. Even in Europe the pax trains fill the tracks in Germany putting most cargo onto trucks except Saturday/Sundays when the Autobahn is for cars.
            So, I think air cargo has a great future in India and the trains will haul pax. Some years ago only 7% of the Indian train pax actually paid for the trip causing huge losses for the goverment run railroads, but if 9% paid it would do really well.

          • Freight trains run intermeshed ( Cargo Sprinter and things ) or run during the night.
            HSR to a large part runs on its own infrastructure “Hochgeschwindigkeitsstrecken”. no collision.
            Nonetheless the overall cookie cut for train transport is shrinking. ( the greens would like to change that. But they make the same mistake Trump makes.:-)

    • There is, to a first approximation, no substitution between surface transport and air transport. The latter is at least a couple of orders of magnitude more expensive than the former for bulk goods.

  4. Very true, never thought of that. Was only once in India in the early 90’s and road transport was to say the least, “something else” then.

  5. From a logistical standpoint, with all the infrastructure issues, does India reach a critical mass where all air travel essentially bogs up and no one can get a flight out anywhere on time?

    Indigo looks to be the only stable operator there, it would be interesting to see how they manage it vs the rest.

    It would seem to me the A330NEO is more suited to that market than the much more techy7 787. At least maint would be familiar with the bleed air powered systems and devices vs the all electronic .

    I crossed over fine, but I was already deep into electrical and electronics already so I had those down in depth (not aircraft)

    For ease of trouble shooting I will take pneumatics any day of the week.

    Pulling entire modules and hoping the problem is there and not in another one someplace is both costly and wasteful (that assume you have the parts on hand to do it)

    Clean fuel, fuel delivery (and clean) runways, terminals, ATC? All huge issues.

  6. “LCC Jet Airways”
    Are you sure Jet Airways is an LCC? I never see them mentioned when discussing long haul LCC, and they definitely fly to Europe (maybe North America too?).

    • I loved flying with them from Hamburg to Toronto (via Brussels). The food made the biggest difference.
      I never thought of them as an LCC. There pitch didn’t seem any tighter than Lufthansa, BA, Air France/KLM or any of the others I had flown with.
      I suppose looking at the relative pitches in seatguru would settle that but it’s not that important for me.
      I haven’t flown with them for a few years now, so maybe it has changed.

  7. Medium speed rail is well established in India and a significant competitor to regional aircraft. High speed rail is being introduced in many areas in the next few years. Highway system has undergone significant advancements in the past few years under the current Modi administration too so it’s not as bad as it used to be.

    Beyond airports bursting at the seams, my biggest concern is the rapid growth of these airlines has outstripped the country’s ability to produce enough well qualified pilots with adequate flight hour experience. And without a strong military feedstock of trained pilots, I believe some of the pilots flying these B737 and a320’s have training levels (and flight hours) more akin to U.S. commuter airlines (under the older flight hour minimums) rather than the established legacy airline pilots.

  8. Off Topic:

    AA has gone with a order of 47 787s (and deferred 50 737-8)

    Interesting the order includes 222 x 787-8 – have to wonder if that is really going to go away and the move to commonality with the -9/-10 is not underway as a result of it.

    • Ann adder is the options. Something like 98 787 are potentially involved in this (see All Things 787)

      To a degree I can see Boeing ramp of of the 787, they need the nearer term slots.

      I still don’t think long term it will hold and they will have to throttle back at some point or overshoot.

  9. With slot restrictions in the busiest airports, I wonder where all of Indigo’s 400 odd A320’s will find parking space. Orders of Max’s from Spice Jet & Jet Airways is more to replace their ageing NG 737’s than going all out on new routes & taking indigo head on, as these two airlines have never benefited from an influx A320 type rated pilots & thus have had minimum growth over the years. Their 737 families will not exceed 120 aircraft each over 3 years from now as retirement of their ageing 737 NG’s which have lasted much longer than most A320 CEO’s of other airlines here. Go Air is a nice player which focuses on profitable operations over market share. Air India is a big loser which is continuously abused by politicians here. Air India has a mix of 320 & 737 families. 320 on domestic & 737 on LC routes. Ironically they have profitable operations on LC overseas routes versus domestic ops. Air Vistara & Air Asia India are one trick ponies with no fleet growth since the longest time & still running in the red with their A320’s.

  10. I can see their is some sort of growth coming in for India with regards to the industry. Well, I do hope they start to invest more in infrastructures as I’ve been there just recently and the air traffic is really poor, delayed flights are more than a normal thing there. If they plan to purchase more planes, infrastructure is definitely something they’ll have to consider as well.

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