What has fuelled Jet Air's ambitious aircraft purchase plan

Moneycontrol Bureau

Jet Airways is expected to order over 100 aircraft from Boeing and Airbus at the Paris Air show in June and this is not the first time that an Indian carrier has or is likely to purchase such a big number of planes

In 2011, no frills carrier IndiGo had surprised the industry by confirming orders for 180 aircraft with European aircraft maker Airbus for USD 15.6 million a deal that is still considered the largest in civil aviation history. The deliveries of these aircraft will be in a phased manner from 2016-2025.

However, there has been speculation for months of a 100-plane order by Jet, but so far the deal, which would be worth some USD 10 billion at list prices, remains unconfirmed. Read This: IndiGo, Jet announce charges for seats & extra baggage

Why are Indian carriers in a rush to place such huge orders?

Currently, there are around 450 aircraft in domestic skies and Indian air traffic is expected to grow  over 15 percent per annum in next ten years. Boeing and Airbus, both have predicted that India will need atleast over 1000 aircraft in this decade.

Airports in Mumbai, Delhi, Hyderabad and Bangalore handle over 100 million passengers annually of which Mumbai is almost saturated. Traffic at other airports too is increasing either due to more flying rights given to global carriers or due to a general increase in domestic travel..

Navi Mumbai Airport is also likely to come up by 2016 along with other 35 non metro airports to cater to increasing demand in tier 2-3 cities.

In its previous report, Centre for Asia Pacific Aviation (CAPA) has pointed out that passenger traffic will reach 250 million by 2020.

After the government opened up the sector for foreign direct investment in 2012, more global carriers have evinced interest in domestic companies. If there are more stake sale deals like Jet-Etihad, airlines will have to expand aircraft fleet to cater to customer base, both in domestic and international skies.

Global airlines' body International Air Transport Association (IATA) has
predicted that India's domestic air travel market would be among the top five globally, experiencing the second highest growth rate in domestic passenger traffic after Kazakhistan but before China.

By 2016,  India is likely to cater to 107.2 million passengers, it adds.

IATA has also predicted that India is the only country that is likely to experience double-digit growth in domestic passenger traffic in next three years recording 22.5, 13.1 and 10.1 per cent growth respectively, adding a total of 49.3 million new passengers.