Asia leads plane orders
NEW DELHI – Airlines across Asia are stepping up the pace of plane orders as the region’s booming economy spurs demand for air travel, making it the prime battleground for Boeing Co. and Airbus SAS.
A surge in budget airlines and flag-carriers’ plans to overhaul their aging fleets are driving demand for new planes in Asia, where more than 800 jets are expected to be sold in the next decade. That number could rise if some countries – especially India and China – speed up the modernization of their airports and the construction of new ones.
Boeing lost several deals to Airbus last year but bounced back last month, winning two major orders totaling as much as $13 billion from the national carriers of Canada and India.
“Asia will drive the demand for new planes over the next two decades. India, therefore, is a centerpiece in our growth strategy,” Boeing’s senior vice president of sales, Dinesh Keskar, said after state-owned Air India decided to buy 50 new planes from the U.S. aircraft maker. Boeing estimates it will sell planes worth $35 billion to the country’s airlines over the next 20 years.
Air India’s order – worth $6.8 billion, minus undisclosed price discounts – was “a major win,” Keskar said, adding that it may influence future decisions by the country’s private airlines, which were recently allowed to fly overseas and are planning to expand their fleets.
“The competition is very much alive. It is going to be fierce,” said Peter Harbison at the Sydney-based Center for Asia Pacific Aviation. “In Asia, both (Boeing and Airbus) appear evenly poised as of today.”
Boeing is betting on its newest offering, the 787 Dreamliner, to be available for delivery in 2008. The midsize, long-range plane, which seats between 200 and 300 people, can fly nonstop between Beijing and London and also serve efficiently on regional routes such as Sydney to Bombay.
Airbus plans a rival, the A350, but it won’t be available until 2010. Meanwhile, the European consortium is banking on the 840-seat A380 – expected to enter commercial service next year – though it’s not expected to find many immediate buyers in Asia, where few airports can be quickly upgraded for its landing.
Still, Airbus has had a head start over Boeing in seizing the Asian growth opportunity, especially with the region’s low-cost airlines, which are in demand as more and more prospering Asians want to travel. Liberalization of national aviation policies and a slew of open-sky agreements among countries have also helped.
The low-cost airlines often want immediate delivery of planes and tend to go for the company offering better price discounts. Boeing has lost out to Airbus on both counts.
Earlier this year, Malaysia’s AirAsia Bhd. – the region’s biggest budget carrier – signed a purchase order for 60 Airbus A320 aircraft and took options to buy 40 more.