Business & Economy

Indian airlines prepare for booming future demand with record aircraft orders

By David Asta Alares

New Delhi, Jun 27 (EFE).- Records have been tumbling for Indian aviation lately after flag carrier Air India signed the world’s largest-ever commercial order for 470 airplanes in February, only to be overtaken last week by its rival Indigo’s purchase of 500 planes, while the sector also set the domestic record for highest single-day passengers in May.

“The orders kind of reinforce the growth momentum that is expected in the sector,” Jagannarayan Padmanabhan, the market intelligence and analytics director at consultancy Ciril, told EFE.

The growth is not out of place in the world’s most populated country, but also has to be seen in the context of the regional ambitions of Indigo and the recently-privatized Air India in the Middle East and the rest of Asia.

Air India, owned by the Tata Group, in February announced the purchase of 250 planes from the Europe-based Airbus along with 220 aircrafts from United States’ Boeing, an order worth over $130 billion as per estimates.

Indigo, the largest Indian airline with a market share of 61.4 percent as per the Directorate General of Civil Aviation (DGCA), last week made public an agreement to purchase 500 planes from Airbus, now the largest-ever order in commercial aviation.

India’s aviation boom as actually been a gradual growth, reflected in passenger numbers that grew from 103 million in 2013-2014 to over 200 million in 2019-20, before being hit by the coronavirus pandemic.

However, the pandemic has already been left behind and Indians are again flying without inhibitions, Padmanabhan said.

India set a domestic daily air traffic record with nearly half a million passengers in May, overtaking pre-pandemic numbers as the country aspires to become the world’s third largest aviation market.

With these numbers, the airlines are “setting up for a more medium term or longer-term sustained growth,” said the expert, adding that a positive GDP growth outlook would also boot the short-term growth.

According to the DGCA, around 700 airplanes currently operate in India, while Airbus estimated last year that the country would require 2,210 new planes in the next two decades to meet its domestic demand.

Even without including the recent orders by Air India and Indigo, Indian airlines had ordered around 1,000 other planes, which will be delivered over the next few years, according to the CAPA Center for Aviation.

Former Air India chairman and managing director Vasudevan Thulasidas told EFE that the sector’s growth was also linked with greater public spending on infrastructure and the privatization of major airports.

“Indian airports were not really much to write home about in the past. And then came the privatization of the Delhi and Mumbai airports along with Bangalore and Hyderabad and a few more. And these airports have now become world class, and much larger than what they used to be,” Thulasidas said.

He also highlighted the plan to turn Delhi into a regional transport hub.

The Indian government has increased spending on aviation infrastructure in recent years and also announced plans to build and extend around 100 new airports, most of them in relatively small cities that so far did not even have an airstrip.

What remains to be seen is how the market evolves in a country which had up to 14 airlines in the past but has only a “limited” number of them operating currently, running the risk of becoming a duopoly between Indigo and the Air India group, which also includes Vistara and low-cost subsidiary Air India Express.

Another Indian airline Go First filed for bankruptcy in May amid a severe fund crunch triggered by supply chain issues, while rival Spicejet is struggling to survive with part of its fleet grounded by Indian authorities.

“Others (airlines) are now really unimportant,” Thulasidas said. EFE


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