‘Indian carriers need $50 bn to buy planes over 10 yrs’

Team Udayavani, Aug 6, 2018, 6:08 PM IST

Mumbai: Indian carriers, which have placed large aircraft purchase orders, will require a whopping USD 50 billion of financing to take the expected scheduled delivery of these planes over the next nearly 10 years, a report said.

With a total of 1,055 aircraft on order, as many as 100 planes consisting of wide-body, narrow-body and regional ones are to be delivered to Indian carriers each year for the next five years, said the report by Sydney-based aviation think-tank Centre for Asia Pacific Aviation (CAPA).

Against this background, Indian carriers will require an estimated USD 50 billion of financing to support projected deliveries until 2027, it said.

Stating that the unexpected recovery in Indian aviation since 2014 has changed the dynamics of the market and the demand for aircraft, the CAPA said, “Positive market conditions have led Indian carriers to place bets on expansion on an unprecedented scale, with as many as 723 aircraft ordered since 2014 and more orders expected.” 

India’s domestic market has grown at around 20 per cent year over the last three years years and a similar expansion is expected in the current financial year, it said.

Meanwhile, international traffic has also grown steadily at 8-10 per cent per annum in recent years, it added.

Projected fleet expansion represents a major opportunity for aircraft investors looking to deploy capital in new generation assets, the report said, adding, “However, despite the strength of underlying demand, operators in the Indian market face a number of challenges.” 

“On the cost front, Indian carriers pay some of the highest fuel taxation in the world and also incur taxes on aircraft leases. While on the supply side, infrastructure and skills shortages (particularly commanders) are potential constraints on growth,” said the CAPA report.