India may buy 1,001 new planes in 20 yrs: Boeing

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New Delhi, Jul 23: India's airlines may be staring at an annual loss of over $2 billion in 2008, but the world's second largest commercial airplane maker Boeing Co raised the 20-year aircraft sales outlook in India as rising disposable incomes boost travel demand.

According to Boeing, Indian carriers may buy 1,001 new planes worth $105 billion in the next two decades. The Chicago-based Boeing had last year forecast sales of 911 new passenger planes worth $86 billion during 2007-2026.

"Commercial airplanes in the 100-400 seat categories will account for the vast majority of growth in air travel over the next 20 years, and airlines will accommodate that growth by adding frequencies and point-to-point non-stop flights," Dinesh Keskar, senior vice-president of sales for Boeing Commercial Airplanes, said.

Since 2004, Boeing has received 164 orders from Indian carriers valued at more than $25 billion at current list prices.

India's $912 billion economy has been growing at an average 8.9 % in the past four years, pushing up the demand for air travel. In addition, discount carriers have made air travel more affordable in India, the world's second fastest-growing major economy.

The nation's air traffic may rise to as many as 313.72 million people by 2012 from the present level of 116 million, KPMG said in a report in June. However, hit by a more than doubling of jet fuel prices and higher fares, passengers carried by Indian domestic airlines have plummeted 17% to 35.06 lakh in June 2008 from 41.16 lakh a month back. The country's air passengers have been growing at over 27% in the last four years.

But the aircraft maker expects India's current aviation sector slowdown to end in the next 10-12 months as the country's carriers resolve overcapacity problems by flying to smaller towns and expanding overseas operations.

"Equilibrium will be found in the next 10-12 months as airlines are working to reduce capacity and cut costs. There is still 10% overcapacity in the market currently even after many of the airlines have rationalized routes and cut loss making routes. This is a game of yield management," Keskar said.