February 25, 2013
Airbus is sticking to upbeat forecasts for aircraft demand in India in the face of financial woes creeping across its airline sector, the European planemaker’s sales chief said on Monday.
“I think that you’ll still see a lot of growth. Will there be occasional hiccups along the way? Probably. In any rapidly growing market, you’ll have some problems,” John Leahy told reporters in Singapore.
The Indian aviation industry lost a combined $2 billion last year and all but unlisted IndiGo - an Airbus customer - lost money, complaining of high taxes on jet fuel, expensive airports and subsidies to state carrier Air India.
Another Airbus customer, Kingfisher Airlines, plunged further into difficulty on Monday when the Indian government announced plans to scrap its domestic slots and international flying rights.
Kingfisher, controlled by liquor baron Vijay Mallya and once India’s second-biggest carrier, has not flown since October 2012 after operations were halted due to a cash crunch.
“Whenever a market is growing rapidly with new entrants, you have a risk of some people stumbling and others will move ahead,” Leahy said.
“The Indian market has been a two-edged sword....The highest fuel cost anywhere in the world is in India. That of course puts a dampener on traffic,” he told reporters.
“It needs more infrastructure support from the government and it needs the government to let the open market work and not try to keep propping up their national carrier with billions of rupees in terms of support.”
Leahy was speaking as Airbus reaffirmed forecasts that Asia-Pacific airlines would need 9,870 new passenger and cargo aircraft valued at US$1.6 trillion over the next 20 years.