India on aircraft buying spree

Indian companies were among the biggest spenders at the Paris air show, indicating a dramatic expansion in its aviation industry fuelled by the budget travel boom, officials say.

Indian companies splurged a total of 13 billion dollars on 150 new aircraft at Le Bourget, according to figures released by rivals Airbus and Boeing.

All the planes on order are intended for the fleets of new or future low-cost carriers, according to press reports in India.

Heading the list was an order for 100 single-aisle A320s, valued at six billion dollars, by future airline Indigo, while new carrier Kingfisher Airlines ordered five of the new A380 superjumbos, five A350s and five long-haul A330s in a deal worth three billion dollars.

Around half-a-dozen new Indian carriers have launched services in the past year, some offering fares as low as two dollars between key city destinations as competition hots up.

According to plane manufacturers, India is the next big thing after neighbouring China.

"We are still looking at China, but India is the next big story," Airbus sales chief John Leahy said, noting "a dramatic expansion" in the Indian market.

With the purchases at the Paris air show, Indian carriers have in recent months committed themselves to buying over 350 new planes with a list price of 26 to 27 billion dollars, according to India's Economic Times newspaper.

It said the industry was being spurred by the India's booming information technology sector.

India launched its open-skies policy in the 1990s, allowing private players to enter the domestic airline market previously dominated by state-run carriers.

"The new low-cost Indian carriers have triggered a burst of activity in the aviation industry on the employment, travel and aircraft acquisition front," said Dinesh Keskar, vice president of trading in Boeing, at a recent press conference.

"I estimate that India will need to invest 35 billion dollars in new aircraft purchases over the next 20 years," he added.

State-owned Indian Airlines and private operators Jet Airways and Sahara command the lion's share of the domestic market but will face increasing competition from low-cost carriers like Air Deccan, Kingfisher Airlines, SpiceJet and Magic Air, which is to be launched in September.

SpiceJet, which has blue-chip investors including Goldman Sachs and Citibank, has two leased Boeing 737-800 planes and has ordered 20 more from US maker Boeing.

"The hope is we will be profitable in six months," SpiceJet chief executive Mark Winders told AFP.

Despite the boom in the industry, many are sceptical of the budget airlines' long-term survival chances.

"Several carriers have announced their intentions to buy planes but the orders are based on future prospects and initial public offerings (IPOs)," said Gopi Krishna, of the French Office for the Export of Aviation Material.