Air India, other domestic airlines spark hopes of a series of order book growth

Air India Has signed a letter of intent with two major aircraft manufacturers Airbus and Boeing. Under the deal, Air India will acquire around 250 fleets from Airbus and 220 fleets from Boeing.

According to the statement, the A350 aircraft will be powered by Rolls-Royce engines and the B777/787s by GE Aerospace’s engines. All single-aisle aircraft will be powered by CFM International’s engines.

Following the order, GE Aerospace’s country head, South Asia and Indonesia, Vikram Rai told PTI that India has the potential to grow on both wide-body and narrow-body lines.

Additionally, the country’s largest airline in terms of market share, Indigo is already set to take delivery of nearly 500 aircraft, while GoFirst will add 72 aircraft to its fleet size. new entrant Akasa Air Air India is also in line to receive 56 aircraft, and Vistara, another carrier owned by Air India, also has orders for 17 aircraft. SpiceJet also has aircraft on order. These are narrow body aircraft.

Considering the above, Indian carriers are set to receive 1,115 aircraft including the latest huge order from Air India.

Rai highlighted that, in India, pre-Covid traffic brought in around 75 million international passengers. And out of this total, around 60-65% passengers used foreign carriers.

He believes that with India’s economy growing and disposable income increasing, there is a huge potential for Indians to travel abroad—and this growth of 75 million travelers to 120-125 million in the next 7-10 years likely to go.

V Thulasidas, who was the chief of Air India from December 2003 to March 2008, said in relation to Air India’s order that the country which now has world-class airports can serve as a hub. He believes that Air India has secured its growth plans for at least the next 10 years.

Talking about the dependence on foreign carriers, Ajay Sawhney, partner at law firm Cyril Amarchand Mangaldas told the news agency, “From a connectivity point of view, Indians have been relying heavily on Emirates, Etihad and Qatar for the last few years, and Air India’s latest order is meant to strengthen the Star Alliance community, which in turn will give Indian as well as Southeast Asian travelers more choice in Europe and the US, and perhaps at better pricing points.

Air India will receive the first new aircraft in late 2023, with the bulk coming from mid-2025. Meanwhile, Air India has already started taking delivery of 11 leased B777 and 25 A320 aircraft to accelerate its fleet and network expansion.

Notably, the Air India group currently includes full-service Air India, as well as two low-cost subsidiaries Air India Express and Air Asia India, which are in the process of merger.

Recently, parent Tata Sons announced its intention to merge Air India with full-service airline Vistara, a joint venture between Tata Sons and Singapore Airlines in which the former holds a 51% stake.

On February 14, Air India said in a statement that, in a stable condition, subject to regulatory approval, the group would include a full-service airline, Air India, and a low-cost airline, Air India Express.

According to a report by the Center for Asia Pacific Aviation India (CAPA India), Indian airlines are expected to place orders for an additional 1,000-1,200 aircraft, starting with another large order from IndiGo.

According to CAPA’s note, almost every carrier in India expects to order more aircraft over the next few years for fleet replacement as well as growth, given that the order book for most existing carriers has been expanded to accommodate growth capacity. can be considered relative conservative. markets over the next decade and beyond.

On Friday, CAPA said in its note that while many airlines in the Asia-Pacific region had halted aircraft deliveries during the pandemic, some of the strongest LCCs continued to receive new narrowbands and are now taking further steps to modernize their fleets. Moving forward.

CAPA specifically pointed to IndiGo’s fleet modernization and capacity recovery strategies. It said, IndiGo did not ditch its narrow deliveries during the pandemic, though it switched its focus – temporarily at least – from fleet development to renewals.

After the Q3 results, Prabhudas Lilladher at Indigo Airlines said, “IndiGo has guided for capacity growth of 45% YoY in Q4FY23 (implies 3% QoQ growth) and ~15% growth in FY24. We expect that RASK will soften QoQ in Q4FY23 (on a relatively higher base) due to seasonal weakness in traffic/fares, lower load factor and lower fuel cost pass-through. Stronger growth outlook, better fare discipline and lower fuel cost key catalysts The stock trades at 10.9x/9.3x FY24E/25E Ebitdar. Buy and hold.”

SpiceJet, which is the other major airline listed on the stock exchanges, will announce its Q3 results this week.

According to DGCA data, in 2022, domestic airlines are expected to carry 1232.45 lakh passengers — higher than the previous year’s 838.14 lakh passengers.

India is currently the third largest and fastest growing aviation market globally.

As of the end of December 31, 2022, Air India has 9.1% market share, while Air Asia and Vistara have 7.6% and 9.2%, respectively. IndiGo continues to dominate the market with a share of 55.7%. SpiceJet and GoFirst have a market share of 7.4% and 7.3%, respectively. Rakesh Jhunjhunwala-backed Akasa Air has 1.8% market share.

Currently, there are about 700 commercial aircraft flying in India, most of which are narrow-body aircraft.

(With inputs from PTI)