India: Boeing says airfares unsustainably low; lifts country's 20-year order forecast

Airfares in the fast-growing Indian market are 10 to 15% lower than breakeven levels for airlines, a Boeing executive said, as the planemaker raised its long-term jet order forecast for the nation to a record despite market challenges. Major Indian carriers Jet Airways, IndiGo and SpiceJet were all in the red in the September quarter as high oil prices, a weak rupee and intense price competition eroded their margins. It is important for the sustainability of the sector that airlines show more discipline in pricing fares, Dinesh Keskar, senior VP, Asia Pacific and India sales at Boeing Commercial Airplanes, said Wednesday. “Double-digit growth coupled with losses is what I am concerned about,” he said. “I will forego 2 to 3% growth for making money rather than filling up my airplane at rock-bottom prices and never making money.” To date, however, the lack of profitability has not affected deliveries to Boeing clients, which include cash-strapped Jet Airways and budget carrier SpiceJet, Keskar said. India’s passenger traffic has risen at around 20% in recent years, making it one of the world’s fastest-growing aviation markets. Boeing expects the country to become the third-largest commercial aviation market by the early 2020s. Boeing sees Indian carriers ordering a record of up to 2,300 new planes worth $320b from global planemakers over the next 20 years to 2037, about 9.5% more than its previous prediction of 2,100 jets until 2036 made last year.<br/>