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article imageBoeing says talks with India's Jet on 'right' track

By Penelope Macrae (AFP)     Mar 13, 2014 in Business

Aviation giant Boeing said Thursday talks appeared on track for the multi-billion-dollar sale of its 737 MAX planes to India's Jet Airways, a day after sealing a major transaction with another domestic carrier.

Sale discussions with Jet -- India's leading premium carrier -- "are probably moving in the right direction", Boeing senior vice president Dinesh Keskar told AFP late Thursday.

Keskar declined further comment on the status of the talks with Jet, a longstanding Boeing customer in which Abu Dhabi-based Etihad Airways recently picked up a 24 percent stake.

Discussions were also under way with state-run Air India about sale of the single-aisle 737 MAX jets but they could take far longer to come to any conclusion, Keskar said by telephone from an airshow in the southern Indian city of Hyderabad.

"Jet and Air India are obviously candidates for the MAX," said Keskar, speaking after Boeing sealed a $4.4-billion order Wednesday from fourth-place no-frills carrier SpiceJet for 42 of the MAX jets, a more fuel-efficient version of the widely used 737s.

Boeing's talks with Jet involve the sale of 50 MAX planes with a total list price of around $5 billion, according to local media reports, but bulk orders always command discounts.

With Air India, "right now, we are working on delivery of the Dreamliner and working out issues", Keskar said.

Air India has ordered 27 of the high-tech 787 Dreamliners from Chicago-based Boeing and so far received 13, which have been hit by a string of technical snags.

The Press Trust of India reported Air India might seek compensation for the Dreamliners because it found the planes less fuel efficient than it expected, in addition to undisclosed compensation the airline has already received for delivery delays.

- Growing market -

All major Indian airlines, except leading budget carrier IndiGo, are haemorrhaging red ink amid price wars and a sharply slowing economy.

But the sector still is in high-growth mode thanks to vast, untapped potential and a growing middle class and will need a huge number of new planes, experts say.

Various aircraft are seen on static display at the India Aviation 2014 airshow at Begumpet airport i...
Various aircraft are seen on static display at the India Aviation 2014 airshow at Begumpet airport in Hyderabad on March 13, 2014
Noah Seelam, AFP

According to aviation consultancy CAPA, Indian airlines are expected to order a combined 400 planes this year -- over double the number now in service with the five national carriers.

"We've just touched the tip of the aviation iceberg," said Amber Dubey, global consultancy KPMG's India aerospace head, noting "access to aviation is still a dream for nearly 99.5 percent" of India's 1.2 billion population.

Boeing in a report earlier Thursday projected demand for over 1,600 new airplanes in India during the next 20 years, valued at $205 billion.

"India's demographics are highly favourable to growth of air transportation" while "the share of India's large population entering the workforce is growing", Keskar said.

Boeing projects passenger airlines in India will rely primarily on single-aisle planes such as the Next-Generation 737 and the 737 MAX to link cities.

European rival Airbus said in a separate forecast India's carriers will need 1,290 new passenger aircraft valued at $190 billion between now and 2032 to satisfy surging demand.

Indian annual passenger traffic growth rates of 8.6 percent are well above the regional Asia-Pacific average growth rate of 6.1 percent and the world average of 4.7 percent, Airbus noted.

The manufacturers' reports were released to coincide with the five-day air show which winds up this weekend.

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