India’s aviation market has started to turn the corner and will come out of the recession faster than the rest of the world, Boeing said at the presentation of its 20-year India Market Outlook Wednesday in New Delhi.

Forecasting sales of one aircraft fewer than the 1,001 units announced last year, now worth $100 billion, Dinesh Keskar, senior VP-sales and president-aircraft trading, Boeing Commercial Airplanes, said Boeing 747 and larger aircraft do not have a role to play in India because the market is fragmenting at a fast pace. He added that with budget carriers leading the pack in the Asia/Pacific region, “the model needs to be redefined from legacy to budget.”

India accounts for 3% of Boeing’s commercial jet market globally.

Although reports have surfaced that Air India may defer or cancel its 777 orders, Keskar confirmed that no discussions have been held with the carrier.

While Jet Airways has leased out nine 777s and deferred delivery of two 777s and five 737s, Boeing is going ahead with delivery through March 2010 of nine aircraft, including five 777s to Air India (it has ordered 23 and received 12), three 737s to Air India Express and one 737 to Jet Airways.

“When Jet Airways took planes, the economy was doing well...777s are great if you can fill them. Jet did not get revenues, so it leased the 777s,” said Keskar, adding there is a definite overcapacity in India, and load factors on international flights average 65%.

Referring to Emirates’ withdrawal of its Airbus A380 from U.S.-Dubai service, Keskar said low unit costs “go to pieces if you can’t fill the aircraft.”

Overall domestic passenger traffic in India is down by 10%, and domestic capacity has been reduced. Keskar said 2009 could be the best year for Indian carriers, but at what point the airlines start making money remains to be seen.

Airlines are approaching break-even with decreased domestic capacity and rational pricing, according to the Boeing outlook. On the Mumbai-Delhi sector, for example, in August 2008 the needed fare was $192, but the typical fare was $122. In June 2009, the breakeven fare was $106, but airlines were charging an average of $86.

Losses per passenger also decreased as airlines managed loads and fares better. On the Mumbai-Delhi sector in August 2008, the loss was $70 per passenger, and in June this year, it was $20.

Boeing expects 31% of the 29,000 aircraft it has forecast for the world for the next two decades to head to Asia/Pacific with 28% for the intermediate network (regionals). “This number wasn’t there a few years ago,” said Keskar.

“India has not scratched the surface as far as cargo is concerned,” he added.

Photo: Boeing