New civil aviation policy could spur demand for planes: Boeing

New Delhi: New civil aviation policy can spur a "potential demand" for more wide-bodied planes, Boeing said Wednesday as it projected India to see a demand for 1,850 new aircraft worth USD 265 billion over the next 20 years.

According to a senior Boeing official, the aviation policy has many growth-oriented aspects, including regional connectivity scheme and the decision to replace 5/20 overseas flying norm with 0/20 rule.

Now, local airlines that have at least 20 planes can fly abroad while earlier they were also required to have five years of operational experience to operate overseas flights.

"There are many things in the policy which are growth oriented... One is 5/20 norm becoming 0/20 allows more airlines to go international which will (also) allow them to potentially consider buying more wide-bodied aircraft," Dinesh Keskar, Senior Vice-President (Asia Pacific and India Sales) at Boeing Commercial Airplanes, said here.

"I am not saying by tomorrow, but at least now the door is open."

While emphasising that India continues to have a strong commercial aerospace market and the highest domestic traffic growth in the world, he said implementation of the regional connectivity scheme would also be a key.

Airlines in India are forecast to take deliveries of 1,850 airplanes valued at USD 265 billion over the next 20 years, according to Boeing.

As per its annual Current Market Outlook (CMO) for India, single-aisle airplanes such as the next-generation 737 and 737 MAX would make up for the largest share of new deliveries at 1,560 planes.

"These new airplanes will continue to support the growth of low-cost carriers and replace older, less-efficient airplanes," it said.

Noting that its customers are placing orders for the next around five years, Keskar said, "We have a lot more potential to sell a lot more aircraft in the growing Indian market... Our customers are a lot more prudent."

His remarks came in response to a query that rival Airbus has been getting more orders from domestic airlines.

Economic, demographic and regulatory trends support high growth in India's aviation sector, Keskar said even as he flagged that higher fuel prices and weakening of the rupee could be a concern.

Air India, SpiceJet and Jet Airways are customers of Boeing.

The aircraft maker said that fuel prices, the exchange rate, and load factor continue to drive airline operating costs and profitability.

"Growth in load factor has reduced break-even fares despite lower fares driving highest profitability in years," it noted.

Globally, Boeing has forecast a demand for 39,620 new aircraft over the next 20 years, with Indian carriers accounting for over 4.6 per cent of the total demand.