Boeing to forecast aviation industry

Boeing Co. said on Tuesday it expects to revise its forecast for India's civil aviation market to reflect faster growth, but warned that delays in infrastructure improvements could hobble the pace of expansion.

The Chicago-based aerospace company had said last August it expected India to buy 492 aircraft for about $36 billion over the next 20 years as foreign investment rules in the sector are relaxed and more airlines launch in Asia's third-biggest economy.

Now, Boeing believes India's demand could be even greater.

"Looking at the context of infrastructure improvements in the sector, the numbers of people that are flying and the plans of airlines that are operating, we believe we will revise our estimate upwards in the next four, five months," said Dinesh Keskar, senior vice president of sales, commercial airplanes.

India's domestic air travel market is forecast to grow more than 20 percent a year over the next five years as incomes rise and fares fall with new carriers entering an increasingly crowded space.

Airlines flew an estimated 19 million domestic passengers in India in the year to March 2005. India has fewer than 200 civilian aircraft, compared with 750 in China and more than 6,000 in the United States.

State-run Air-India this month placed a firm order with Boeing for 68 aircraft, valued at more than $11 billion at list price, while Jet Airways Ltd. and SpiceJet Ltd. placed firm orders for 30 Boeing aircraft in 2005.

But delays in enhancing airport capacity, a shortage in pilots and skilled engineers, and inadequate maintenance, repair and overhaul facilities could slow the pace of growth and increase operating costs for airlines, Keskar said.

"These are challenges before the industry which can severely limit performance and the airlines' ability to operate efficiently and profitably," Keskar said.

Boeing has committed to spend $100 million on maintenance, repair and overhaul facility, $75 million on a pilot-training facility and $10 million on incremental facilities. It will also source 85 billion rupees ($1.9 billion) in products and services over a period of 10 years.

Boeing has also said it would consider India's participation in design and manufacture of aircraft parts in the long term.