Expressing concern over the losses incurred by the Indian aviation industry, US aircraft major Boeing has cautioned that this could lead to a "potential disaster" if it went unchecked.
"The losses in the Indian aviation industry are a cause for concern. It needs to be checked otherwise that will be a potential disaster for the industry," Boeing's' Senior Vice President (Sales commercial planes) Dinesh A Keskar said.
He said India's low cost carriers faced pressures on yields per passenger due to low fares and high fuel prices.
Despite a sudden growth in passenger traffic and a projected growth of about 20 per cent in the next four-five years, the Indian civil aviation sector has seen many of the major players in red.
Leading carrier Jet Airways reported a loss of Rs 45 crore in the quarter ended June, despite clocking a 25 per cent increase in revenue at Rs 1,680 crore. Low cost airline Air Deccan reported a loss of about Rs 35 crore in the 12 months ended March this year, while another budget airline SpiceJet had also reported a loss of Rs 41 crore in the fiscal ended May.
Pointing out that the sustainability of the sector withstanding loss was under question, Keskar said mergers and takeovers were on the cards.
"In the next 12 months there could be consolidation," he said.
"They have to increase fuel surcharges and look at ways of selling seats at differential prices so that low yields from cheaper ones could be offset by those from the higher priced seats," he said.
Despite these concerns, Boeing is bullish on the Indian aviation sector and has projected that the sector would require 856 new commercial jet airplanes worth over 72 billion dollars, over the next 20 years.
"Boeing forecasts a long term requirement for increased passenger traffic in which airlines significantly add frequencies with smaller aircraft to meet demands," he said.
"We also see a considerable increase in the air freight market that will need to support the country's exports, which are growing at an estimated 5-6 per cent a year for the next 20 years," he said adding in the next 4-5 years, the growth could be as high as 20 per cent.