Dramatic growth in Indian air travel dominated the Paris Air Show for the second day running on Thursday as a hefty Airbus order from low-cost start-up IndiGo lifted the tally of Indian deals to $13 billion.
The surprise order for a full fleet of 100 jets in the single-aisle A320 family comes on top of a string of Indian aviation deals announced during the week.
Together with forecasts of a travel boom in China, Airbus says India is one of the world’s most promising markets and predicts 100 million new urban middle-class consumers will become potential air travelers by 2010.
Other deals at the world’s largest air show include an order for A380 superjumbos and other aircraft from India’s Kingfisher Airlines, run by the flamboyant Kingfisher beer magnate Vijay Mallya, and a split order from Jet Airways for both Airbus planes and rival Boeings.
“India is starting a rapid economic expansion and we think air travel will be part of that,” Airbus Chief Commercial Officer John Leahy told reporters.
Air travel tends to grow at twice the rate of GDP, he said.
India’s economy grew at 6.9 percent the year to March 2005, according to official forecasts, while the government expects deregulated air travel to grow by up to 20 percent a year.
First, however, the country needs to improve its civil aviation infrastructure, officials said at the Paris Air Show.
Airbus also landed orders from another brand-new airline, Mexico’s Interjet, and added a customer for its future A350 midsize airliner, Brazil’s TAM. The A350 is making up ground on its successful Boeing competitor, the 787 Dreamliner.
Action has shifted
“People have a tendency to discuss the U.S. and Europe. It’s yesterday’s story,” said Jon Kutler, Chairman and CEO of Jefferies Quarterdeck, an investment bank focused on the aerospace industry. "The action is in the Middle East and Asia.”
Travel group InterGlobe Enterprises Limited plans to launch IndiGo as a low-cost venture, entering the market in force with a nationwide network and a full fleet of jets, Airbus said.
The airline’s creation marks a comeback into airline management for a former high-flyer in the U.S. airline industry, former U.S. Airways chief Rakesh Gangwal.
Gangwal was initially credited for helping turn around the ailing airline in the late 1990s, but his stint at the top until 2001 was marred by several setbacks for the airline, including a failed merger and the start of an industry-wide recession.
Calcutta-born Gangwal, who has also held positions at United Airlines and Air France, is Chairman and CEO of reservations service Worldspan Technologies.
Deliveries of IndiGo’s planes will start late in 2006.
Airbus claims to have bagged more than half of the $40 billion or so of orders announced at the show, although analysts say Airbus and Boeing have different ways of logging their sales and the daily battle between them is partly one of spin.
Despite this week’s bigger-than-expected order rush, Boeing is expected to outpace Airbus in total new orders in 2005 for the first time in 5 years.
Boeing announced overnight it had sold 35 short-haul 737-800 aircraft to Alaska Air Group, which may also buy up to 15 more. The deal is worth $2.3 billion.
“Orders at air shows used to be a big statistic, but they are mostly irrelevant now. They are just a picture of a point in time,” Kutler said.
A veteran of PR battles himself, Airbus’s chief salesman Leahy turned an embarrassing moment into a dig at Boeing’s efforts to talk up the success of the 787 Dreamliner.
“We’re quietly selling airplanes to the point of running out of pens,” Leahy said at a signing ceremony with Brazil’s TAM.
He meant it. Moments earlier, he had fumed at his aides for setting out only one pen for the signing instead of two. “The guy buys $1 billion of planes and he doesn’t get a pen,” he said.
