NEW DELHI (Reuters) – Boeing Co (BA.N ) raised its projection for India’s aircraft orders to a record high on Wednesday, predicting the nation’s airline carriers would order up to 2,300 new planes worth $320 billion from global planemakers over the next 20 years.
The US planemaker’s estimate for the period up to 2037 is about 9.5 percent higher than Boeing’s previous prediction made last year, when the company projected India would order up to 2,100 jets until 2036.
India is one of the world’s fastest-growing aviation markets, with domestic passenger traffic having been growing at around 20 percent in recent years, and Boeing expects the country to become the third-largest commercial aviation market by the early 2020s.
However, high oil prices, hefty fuel taxes and a weak Indian rupee have hurt airlines’ profitability this year, although pressure is starting to ease as oil prices fall and the currency firms.
The Indian market, dominated by low-cost airline carriers like IndiGo (INGL.NS) and SpiceJet (SPJT.BO), is also hobbled by cut-throat competition and chronically low air fares that have left full service airlines like Jet Airways (JET.NS) and Air India strapped for cash.
“India sees dramatic fares and discounts, and that is going to hurt airlines more and more,” Dinesh Keskar, the senior vice president of Asia Pacific and India sales at Boeing Commercial Airplanes, told reporters on Wednesday.
“It is important that discipline in airfares comes in,” Keskar added.
India’s domestic airline carriers like Vistara, a joint venture between Singapore Airlines (SIAL.SI) and India’s Tata Sons, as well as IndiGo and budget airline GoAir, are looking overseas for better returns.
Boeing expects single-aisle planes, such as its 737 MAX, to account for 84 percent of all global planemakers’ new jet deliveries to India from 2018-2037, which is much higher than the global average.