Carriers to add 700 aircraft by March 2015

Carriers to add 700 aircraft by March 2015

Airlines in India are likely to add 700 new aircraft in their fleet by March 2015 but an aviation thinktank has warned that financing may be challenging for some carriers.

According to the India Aviation Outlook Report for 2014-15 of Centre for Asia-Pacific Aviation (CAPA) , at the end of 2013, Indian carriers had approximately 350 aircraft on order and by March next year, it is likely to rise to over 700 aircraft.

This would include Air Costa's recent order for 50 firm Embraer regional jets and Tata-SIA's 20 A320s, which may be converted from an operating to a finance lease.

However, CAPA said that financing may be challenging for some carriers. “Given the ongoing difficulties in the operating environment and with the Kingfisher experience still fresh, some banks remain concerned about the level of risk in the Indian market, especially as the provisions of the Cape Town Convention are yet to be formally incorporated into the Indian civil aviation regulations,” it said.

It said the Tata-SIA's conservative order will certainly be followed by a more robust long-term order if the 5-year and 20 aircraft regulation for operating foreign services is lifted.

“SpiceJet and Jet Airways are expected to confirm reported orders for 40 and 50 737MAX aircraft respectively. Jet may also be allocated some of the more than 100 wide body aircraft ordered by Etihad at the Dubai Air Show in November 2013. Meanwhile, IndiGo is expected to place another massive order for 200‐250 additional aircraft,” it said.

As the sector approaches the end of this fiscal, it said Indian carriers are set to report yet another year of widespread red ink. 

Indian carriers are expected to require capital infusions of $1.6 billion over the next 12‐18 months just to continue operations, leave alone investment in new aircraft. Air India accounts for approximately $1 billion of this requirement. 

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