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Boeing sees Indian airlines focusing on profit over growth

Boeing says that airlines in India are beginning to better balance capacity with demand, and are seeing better yields.

“Air fares in the last 30 days have gone up and growth (in capacity) has actually come down by 2%,” says Dinesh Keskar, Boeing’s senior vice-president, Asia-Pacific and India sales.

One key contributor to that trend is the stabilisation of fuel prices over the recent quarter, he adds.

“With that happening, I have a feeling that airlines may finally at least break even and start coming out of their doldrums.”

Keskar also suggested that growth among Indian airlines has been artificially inflated, with the industry’s “average load factors of 80%” driven by low fares, and called for the industry to curb its overcapacity.

“There’s not many clientele in India that can pay the real fare, and I think they realise that…. [When] there are other things forcing them to reduce capacity, there is better balance of supply and demand and a better situation to improve yields,” he says, citing the recent examples of IndiGo cancelling flights due to pilot shortages, and Jet Airways’ reduced airline operations.

“India is better off if they trade little bit of growth rate [for] profitability.”

Keskar adds that yields among carriers are also expected to improve over the foreseeable future as more airline start to phase out older aircraft types and taking on new ones, such as the Boeing 737 Max.

“The reduction in the fuel burn of 14% is a clear-cut winner, because all that money goes straight to the bottom line.”

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