Boeing sees continuous growth of commercial aviation in India; demand for over 2,800 aircraft in 20 years
Ghazala Wahab
Statistics are like a pond full of fish. You choose the ones you desire. And if you don’t find the one you like, you can always add the spices while cooking it to suit your palate. That’s the good thing about data. It can be used to induce optimism as well as despair.
Boeing chose optimism in its annual press conference to share its commercial market outlook (CMO) for India on February 6, four days before Aero India. Its optimism was built on the foundation of three presumptions about the Indian economy: four times growth in the GDP by 2050; rising disposable income; and increase in jobs in the manufacturing sector. Based on these, Boeing assessed that by 2031, India will be the third largest economy in the world. Given that even today, the aviation sector contributes USD 54 billion to the economy and has created 7.7 million jobs, it is only natural that as the economy expands, this sector will grow too.
Hence, by 2043, the South Asian region, led by India by a vast margin, would have the requirement of 2,835 aircraft, most of them single aisle. This will lead to the demand for nearly 129,000 pilots, technicians and cabin crew. The Boeing market analysts combined numbers with aspirational sentiments of India’s growing middle class, comprising a huge youth population to arrive at this conclusion. According to the CMO, these numbers would be achieved by roughly 7.4 per cent growth in the aviation sector over the next 20 years.
Boeing’s qualitative analysis depended upon two factors. First, the evidence that air traffic grows when the infrastructure expands. The Boeing spokesperson used the example of the opening of the second airport in Goa in December 2022, which led to 33 per cent increase in passenger traffic, to make the case that with the opening of the Jevar and Navi Mumbai airports, air traffic to both Delhi and Mumbai was likely to double. Add to this the fact that in addition to 138 currently operational airports, 162 are under development.
Second, the concurrent increase in disposable income and aspirations show that passengers who travel by air, seldom go back to other modes of transportation. Hence, if a rail passenger experiences air travel, she would always want to travel by air, instead of going back to the train. Given this, Boeing assesses that if there is even a two per cent shift from train to air in India, the air traffic would double.
Boeing’s optimistic outlook also includes air cargo, which it expects to double in the next 15 to 20 years. And since Boeing is the global leader in freighters, this growth will automatically lead to the expansion of its fleet in India.
To balance the outlook with a bit of present reality, the Boeing presentation included a slide on the challenges. Top on the list was the cost of aircraft turbine fuel (ATF), which in India is amongst the highest in the world. This is one of the reasons air travel is expensive for the customers and unprofitable for the airlines. The last two decades have seen the emergence and collapse of several private airlines, both full fare and low cost. The other challenges included poor airport infrastructure and limited international routes for Indian carriers, putting them at a disadvantage vis a vis other global operators.
However, the biggest challenge that is overlooked by these numbers is the nature of the Indian economy, of which the GDP is not the correct marker. A more appropriate representation of the economy is the per capita income and per capita expenditure. It would be an interesting exercise to find out how much of India’s aviation sector growth is fuelled by individual spenders and how much by the corporates. And how many of these corporate travellers choose to travel by air when they buy their own and their families’ tickets for a holiday.
Also, the presence of airports does not automatically translate into air travel. If a sector is not profitable, the airlines will not fly that sector, rendering the airport under or even unutilised. This has been the fate of many airports in Tier II cities across India, especially if those cities are better connected through rail and road. Take for example Agra, which despite substantive tourism and export-oriented industry does not have a full operational civilian airport.
Optimism is good for health, both of individuals and companies. But unless it is tempered by a dose of realism, the possibility of future disappointment cannot be ruled out.