Upcoming aircraft orders and new entrants further underscore India’s growth potential

Summary:

  • Akasa plans to launch its operations at the end of July 2022, with an ambitious growth strategy.
  • Jet Airways is considering a large narrowbody order and could lease planes in the meantime.
  • Air India is expected to order narrowbody and widebody soon, with the A350 in the running.
  • Airbus holds the largest share of India’s narrowbody market, while Boeing dominates widebody aircraft.

Akasa aims to become a significant competitor fairly quickly

Akasa gradually went through the myriad of steps necessary to begin operations.

These efforts resulted in the airline obtaining its Air Operator’s Certificate (AOC) from the Indian Directorate General of Civil Aviation (DGCA) on July 7, 2022.

The LCC can now offer its flights for sale and intends to launch its first scheduled flights at the end of July 2022. It has already carried out test flights as part of the approval process.

If Akasa launches this month, it wouldn’t be too far off from its original goal of going live in the first half of 2022 – which is impressive, considering most startups are taking much longer than expected. .

Akasa will use Boeing 737 MAXs, with the first arriving in June 2022. The airline plans to have two flights by the time it enters service and plans to add more planes each month, drawing from the 72 MAXs that she ordered in November 2021.

Akasa aims to have a fleet of 18 by the end of March 2023, adding another 12 to 14 every 12 months thereafter. This would mean that all of its orders would be delivered over five years.

The airline is entering an Indian domestic market already dominated by LCCs. The chart below shows that LCCs currently account for almost 80% of India’s domestic capacity.

IndiGo is by far the biggest player, but other Indian LCCs include Go First, Spicejet, AirAsia India and Air India Express.

AirAsia India and Air India Express are expected to merge, but it shows that Akasa is still entering a fairly crowded industry.

Air India and Jet Airways orders will determine their long-term fleet strategies

Air India and Jet Airways are expected to place orders for hundreds of planes as they consider the next phases of their fleet development.

Jet Airways has yet to resume operations after being relaunched under new ownership. Almost all of its planes were taken over by lessors after the airline grounded in 2019, and owners said they were looking to order planes to support their growth plans. Executives have signaled they are discussing a large narrowbody order with manufacturers – although in the short term Jet Airways may lease planes to enable them to launch operations this year.

Jet previously operated Boeing 737s, but did not reveal which manufacturer it will choose for its future narrowbody fleet.

Air India is believed to be set to place even larger orders, including narrowbodies and widebody aircraft. This will be a priority for the airline’s new owner, Tata Group, as Air India currently has no aircraft on order to replace aging fleet types.

Various news outlets are reporting that Air India is considering a narrowbody order ranging from 100 to 300 planes. The airline is also believed to be preparing to order wide-body aircraft, and a note to pilots seems to indicate that the Airbus A350 is the main competitor.

CAPA’s fleet database shows that Air India currently has almost 70 narrow-body Airbuses (in service and inactive), although 27 of them are relatively new A320neos.

The airline’s wide-body fleet includes 16 Boeing 777s, with an average age of about 13 years, and 27 787-8s. The airline also has four 747s, although these have been grounded for some time and are not expected to resume service with Air India.

Airbus will continue to dominate India’s narrow-body fleet and could also enter the wide-body equation

The scale of upcoming – and recent – ​​orders will undoubtedly influence Airbus/Boeing’s future market share in India.

The graph below shows that Airbus aircraft currently account for 79% of the in-service narrow-body aircraft operated by Indian airlines.

Existing narrow body orders are also biased in favor of Airbus. The European manufacturer accounts for a 63.5% share of India’s 988 narrowbody orders.

IndiGo, Go First and Vistara have all ordered A320neo family jets, while Akasa and Spicejet have ordered Boeing MAXs. If Jet Airways and Air India select Airbus, it would further increase Airbus’ share of India’s narrowbody orders.

The situation is very different in the widebody market.

Boeing aircraft account for 100% of India’s widebody fleet, as well as all of the existing 15 widebody orders. An A350 order by Air India would obviously reduce Boeing’s share in this market sector.

Fleet renewal and growth have once again become post-pandemic priorities

The ordering decisions likely to be made this year will have a major influence on India’s commercial aircraft fleet in the long term.

The fact that airlines – including those in India – are considering ordering planes again is a sign that the industry is confident that the post-COVID-19 recovery is well underway. With decisions about the fleet having been delayed over the past few years, ordering replacements has become even more of a priority now.

This is particularly the case of Air India. The airline had avoided placing orders even before the COVID-19 pandemic, due to uncertainty surrounding its ownership and mountainous debt. With new investors, the time has come to meet the needs of the fleet.

The upcoming deals are expected to push India’s total narrowbody orders past 1,200 planes. This demonstrates airlines’ confidence in the potential for continued rapid growth in the Indian travel market.

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