Paris Air Show, a mixed bag for Indian airlines

Airlines from India, among the fastest growing by passenger volume in the world, will be wooed by aircraft manufacturers at the Paris Air Show this week but are unlikely to be major buyers. Analysts say that the world's oldest and largest air show, which kicks off Monday, may see few deals from India as budget carriers struggle to manage costs and move to profitability. India's airlines lost a total of 400 million dollars in the nine months ended December 2006 as high fuel and aircraft purchase costs hit carriers, experts told an aviation conference earlier this year. But full-service Indian carrier Kingfisher Airlines is expected to place orders as it prepares to expand into budget services in India and fly to international destinations as well, said Amar Kedia, aviation analyst with brokerage Mumbai-based ICICI-Securities.

"We will be surprised if Kingfisher does not order more wide-bodied aircraft for their international operations," Kedia said. "They do have aggressive international plans." Kingfisher Airlines chief executive Vijay Mallya was quoted as saying on the sidelines of IATA's annual meeting in Vancouver in early June that the company wil announce a new aircraft order with European manufacturer Airbus. Kingfisher has already ordered Airbus's A340-500s that can directly serve the US West Coast. In 2005, Kingfisher ordered 15 Airbus aircraft: five of the new superjumbo A380, five of the future A350 and five A330s. Its A380 delivery was delayed and is now expected in 2011. "Kingfisher could look for Airbus planes, likely jumbo A340-600s, for non-stop connectivity (between India and the US)," said Gautam Roy, airline analyst with brokerage Edelweiss Capital.

In addition Mallya's UB Group, the parent of Kingfisher, last month bought a 26 percent stake in Indian budget airline Air Deccan, throwing a 5.5 billion rupee (135 million dollar) lifeline to the loss-making carrier and enabling both airlines to trim costs and share resources. The world's biggest civilian aircraft manufacturers, US-based Boeing and Airbus, announced new business worth 48 billion dollars (36 billion euros) at the last Paris show in 2005 with India a major buyer. In 2005, budget carrier Indigo ordered 100 A320 planes from Indigo worth about six billion dollars (4.96 billion euros) while full-service Jet Airways bought 10 A330 airliners for around 1.65 billion dollars. But new orders are not likely by many of the other carriers including state-owned domestic airline Indian and international flag-carrier Air India which have already made purchases since the last show.

In January 2006, Air India signed an agreement to buy 68 Boeing jets for around 11 billion dollars to upgrade its ageing fleet, marking the biggest deal in Indian aviation history. In 2005, Indian Airlines ordered 20 Airbus A-319s, 19 A-321s and four A-320s in a deal worth 2.2 billion dolars. In February of this year, the government announced plans to merge the state-owned carriers in a bid to better compete in India's booming aviation sector. More than 50 percent of the fleet in India is made up of Airbus planes, while Boeing commands a 25 percent presence. At least half-a-dozen carriers, including budget airlines, have taken flight in the past three years in India's liberalised skies, which were previously dominated by the two state-run companies. In February Airbus calculated that India would need a further 1,100 planes by 2025 on predictions that domestic passenger travel would jump to more than 180 million annually from around 25 million now.

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