According to Dinesh Keskar, Senior VP, Asia Pacific & India, Boeing Commercial Airplanes, the Indian aviation sector is facing challenges such as depreciation of rupee, high fuel cost, slowing GDP growth and restrained capacity and these are adversely impacting the growth of this sector. “In India, carriers pay nearly 70 per cent of their costs including fuel, lease market rentals and spares and repairs in dollar while the major share of revenue comes in rupee. This is the reason for the mounting losses of Indian carriers which is beyond the airline’s control. However, we are optimistic that the situation will improve in Q3 as the holiday season has already started,” he said, and added that Indian carriers need to discipline capacity.
Explaining it further, Keskar cited examples of hike in operating costs and airfares. “Fares remained on the lower level while cost of operation has gone up. ATF cost has touched Rs. 73,607 per KL compared to Rs. 28,000 per KL in 2005-06. Fuel accounts for nearly 40 per cent of operating cost. However, the average fares have not increased in proportion to the hike in ATF. Hence, India carriers need to plan effectively and there is a need to balance this as well as supply of airline capacity,” he added.
Despite these challenges, Keskar maintained Boeing’s forecast for the Indian market. “We are quite bullish on the Indian market as it has grown significantly. We have not revised our forecast but we are standing by the prediction of 1,450 airplanes worth US$175 billion for the next 20 years. Even today, nearly five million people fly every month. With new competition coming in, the Indian market will offer more choice for passengers,” he said.
Replying to a question over the recent tie-ups between Tata-SIA and Tata-AirAsia, he said Boeing is keeping tab on these developments. “As the Tata-Singapore Airlines gets ready for its operation, we would certainly want a chance to work with them. The positive thing for Boeing is that we know Singapore Airlines very well,” he said.
Keskar clarified on the performance of 787 Dreamliners which has continuously been in the news for wrong reasons. “The 787 is 97 per cent reliable and a safe plane. It never put the lives of passenger or aircraft at risk. However, I am not happy with that as Boeing aircraft can do much better. Each of these 787s is equipped with on-board computers which keep note of every single detail of the aircraft while it is airborne. Every piece of data is assembled and analysed, and corrective measures are initiated, if required,” he said and informed that Boeing team is in constant touch with Air India top management and DGCA on a daily basis.
According to him, Air India is witnessing improved profitability on those routes which were not making money earlier. Keskar also spoke of the latest status of MRO in Nagpur, stating that it will be operational by mid-2014. The US$100 million MRO project in Nagpur is part of an agreement between Air India and Boeing following an order for 737s and 787s, which was placed by Air India in January 2006.
Keskar also introduced Boeing 737 MAX, the latest aircraft from Boeing. The MAX is the response to Airbus’ A-320 New Engine Option or NEO and is scheduled to take wings in 2016 and its first delivery to a customer is expected to start in the fourth quarter of 2017. SpiceJet, Jet Airways and Air India Express are the three target customers for these, he revealed.
