New Delhi: For India's airlines chasing bigger fleets to cash in on booming air traffic, the struggle is real.
Boeing Co. may deliver sharply fewer aircraft to Indian airlines next year as it slows production, while Pratt & Whitney (P&W) continues to inspect hundreds of engines on Airbus neos, industry executives said. The result: While Air India Express and Akasa Air can't get their hands on promised Boeing Max planes, market leader IndiGo awaits delivery of new and inspected Airbus 320 neo planes with P&W engines.
Boeing has guaranteed Max deliveries till December, an executive at one of the airlines operating the plane said. “The delivery outlook beyond December 2024 looks grim, and may impact our expansion plans in 2025,” the executive said on condition of anonymity.
The bankruptcies of Jet Airways and GoFirst, followed by the grounding of many aircraft by IndiGo and SpiceJet, and the upcoming delay in aircraft deliveries will set back India's aviation industry, analysts said. Slower fleet expansion may also bump up airfares in 2025, even as more Indians take to air every year. Indian airlines carried a record 152 million passengers in 2023, a 23% increase from 2022 and a 5% increase from 2019. As per the latest data from Directorate General of Civil Aviation for 2024, the domestic air traffic from January to May rose 4% on year to 13.8 million passengers.
“This (reduced aircraft delivery) is set to impact the aviation market negatively. Fares will go up, and that is set to impact passenger growth, negatively. For instance, a return flight to Kochi from Delhi is more expensive than flying to Vietnam... So, this is set to impact domestic tourism too,” said Mark Martin, CEO at Martin Consulting, an aviation consulting firm.
According to a second executive, Air India Express and Akasa have been lucky so far. This is because some Chinese airlines decided not to take delivery of the planes they ordered, and Boeing diverted them to India. "However, this would only cover the first 50 Max deliveries for Air India Express and around 25 Max deliveries for Akasa. Beyond that, it will be dependent on supply chains and the rate of Max manufacturing rate," the executive said on condition of anonymity.
A third executive attributed the delay in Max deliveries to slower production. “A slower delivery is set to impact our expansion plans and would mean higher fares, which may impact passenger growth too,” the executive said on condition of anonymity.
While Air India Express may receive 27 more aircraft this year and has given no outlook for next year, Akasa Air is inducting fewer than the planned 12-14 aircraft per year, informed the first executive.
Akasa Air founder and CEO Vinay Dube had said in February 2023 that the airline hoped to reach a fleet size of 25-30 aircraft by the end of FY24. However, as the airline has reached a fleet size of 24 aircraft as of June 2024, it seems that the induction plan for now has slowed down as compared to the earlier guidance. In February, Dube had further added that the airline expected to add around 12-14 aircraft every year until 2027.
A Reuters report on 11 June said Boeing is producing fewer Max single-aisle jets to improve manufacturing quality, after the 5 January mid-air blowout of a door plug on a 737 Max 9 jet raised scrutiny from regulators. In May, Boeing delivered 24 commercial planes, less than half of what it delivered a year earlier, as it operated a slower assembly line to complete pending work. Out of this, 19 were Max, three more than in April, but down 45% from the 35 in May 2023.
In response to a Mint query, a Boeing spokesperson said the company can't comment on delivery schedules. An Akasa spokesperson declined to share any direction on aircraft deliveries, while an Air India Express spokesperson did not respond a query.
Meanwhile, more than 70 Airbus aircraft belonging to India’s largest carrier IndiGo remain grounded due to issues with the Pratt & Whitney engines and their impending inspection, as well as a shortage of engines from the US company. The airline has been scouting the used aircraft market for leased aircraft and talking to lessors to extend leases on the aircraft that were about to be returned.
"Boeing 737 MAX-9, the flight variant involved in the door blowout incident is not currently in operation in India. The orders by Akasa and Air India Express comprise Boeing 737 MAX 8-200 and 737 MAX 10 models. However, due to scaling down of production as a fallout of the incident, coupled with a resumption in deliveries of new flight orders to China, this could end up creating a production bottleneck for Boeing and might delay the delivery targets set by Akasa and Air India Express. Boeing has restricted the production of 737 MAX to below 38 per month from 47 per month as targeted earlier from August this year," said Pragya Priyadarshini, vice-president at Primus Partners, a consulting firm.
Air India Express and Akasa together have over 300 aircraft on order. SpiceJet also is a Max operator and has over 200 aircraft on order, but it is not taking deliveries due to financial problems.
Air India had placed a mega-order for 470 aircraft in February 2023, including 190 Boeing Max aircraft. Of this, Air India Express is expected to receive around 170 Boeing Max aircraft.
Akasa Air, which started operations in Aug 2022, has a total orderbook of 226 Max aircraft. While the airline has refrained from providing delivery timelines in the recent past, it was more confident of its delivery timelines a year ago - as per the planned induction exercise a year ago, the airline had hoped to add 12-14 aircraft ever year till March 2027.
