INDIA'S AIRLINES FLYING HIGH

The Indian airline industry has hit a new high in January 2006 in terms of capacity addition, following a remarkable year of aircraft acquisitions in 2005. In the first week of January 2006, Air India, the state owned airline, placed an order for 68 jets with Boeing. The order was worth $11 billion-the largest ever placed by any Indian airline. It also took close to a decade to negotiate In terms of number of planes the largest order from an Indian airline came from IndiGo, a new private airline co-founded by Rakesh Gangwal former CEO of US Airways. That airline ordered 100 jets from Airbus in an order worth $7.8 billion, at the Paris air show in July 2005.

The Air India order is a milestone in Indian aviation since it puts India firmly on the map as one of the world's largest buyers of airplanes. In the nine-month period ended July 2005, Indian airlines ordered 250 aircraft from various global manufacturers including Brazil's Embraer-roughly half of the total orders placed with aircraft manufacturers during that period. India's airlines ordered more than 200 planes in calendar 2005, worth over $24 billion.

Besides the IndiGo acquisition, others such as Jet Airways (India's largest privately owned carrier), Kingfisher Airways and Deccan Air placed orders worth $17 billion for a total of 150 planes. The explosion in demand for domestic air travel as people shift from costly train journeys as well as the expansion and modernization of many airports in the country undertaken by the Indian government is prompting a major capacity expansion, and several new airlines have sprouted in the past two years, including Deccan, IndiGo, Paramount, Spice Jet and Kingfisher.

Both Boeing and Airbus are hoping the buying will continue and are investing unprecedented amounts in India in pilottraining facilities, including simulators, and in aircraft maintenance. -Aaron Chaze

© 2006 Global Finance Media Inc. Provided by ProQuest LLC. All Rights Reserved.