Overcapacity is what went wrong in India

Overcapacity is what went wrong in India
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First Published: Sun, Jun 14 2009. 08 39 PM IST

Navigating the downturn:Keskar says Boeing is partnering with clients and suggesting ways to cut costs
Navigating the downturn:Keskar says Boeing is partnering with clients and suggesting ways to cut costs
Updated: Sun, Jun 14 2009. 08 39 PM IST
Mumbai: In early 2008, American airplane manufacturer The Boeing Co. revised its forecast for India to 1,001 planes between 2008 and 2027, from 911 between 2007 and 2026. When Dinesh Keskar, the newly appointed president, Boeing International Corp. India Pvt. Ltd, makes his forecast presentation next month, the Seattle-based firm is expected to revise upwards its forecast for 2009 to 2028 despite the Indian aviation industry going through one of its worst crises. Keskar, who is fond of old Bollywood songs, sweets and ice cream, spoke to Mint earlier this week over a vegetarian lunch in Kuala Lumpur after dodging a throng of mediapersons at the International Air Transport Association annual general meeting. Edited excerpts:
What are you doing these days? Not selling planes, surely.
Navigating the downturn:Keskar says Boeing is partnering with clients and suggesting ways to cut costs
(Laughs) We are always in touch with our customers. That does not mean we are selling planes. After doing business of $25 billion (Rs1.19 trillion) with Indian clients, we are in the process of delivering those planes. Most of them have been delivered while some are remaining.
In India, the aviation industry is facing a downturn...and none of the Indian carriers are making money. Therefore, we are partnering with our clients and suggesting ways to cut down costs. We are in discussion with them to help them bring their business back to healthier terms.
Jet Airways has asked you to find a customer for its Boeing 777. Are you now finding customers for your customers?
It’s a tough time everywhere. Firstly, we are fortunate that we are delivering airplanes, on time, per schedule regularly to our four clients. There is only one Boeing 777 remaining to be delivered to Jet Airways (India) Ltd this year. They are committed to taking it but are asking if there is a potential airline in the world that can operate or use that Boeing 777. There is nothing new in these practices.
Have you ever sold an Airbus plane?
In my previous job I was president of aircraft trading. At that time, as a result of Singapore Airlines buying (a) huge fleet of Boeing 777s, we ended up buy 17 Airbus A340 planes from them to facilitate that acquisition. And we sold those planes, first to Cathay Pacific Airways Ltd, Emirates Airline, Gulf Air Bahrain and to others. So, to sell Boeing 777s, I also sold brand new A340 planes. That was interesting.
Will the number of planes that India needs go up in the context of slowdown?
We are not in a position to comment on the current market outlook as we are going to release the same next month in India. Last year’s forecast was $105 billion worth (of) business and 1,001 planes for next 25 years. But I believe, there will be a shift from larger planes to medium sized planes. And that is where I see some increase in total numbers.
Orders are made in happier times and deliveries in tougher times. Is this the toughest time ever that the industry is facing?
In the past, there was a recession and only the revenue side was affected. It is rare that costs are also going up because of high fuel prices and the recession is putting pressure on the traffic, mainly premium traffic. In my 30 years of experience, I have never seen a situation where you have a problem on cost side as well as revenue side.
Are your clients renegotiating for a lower prices?
Once an agreement is signed, that is final. It’s a done deal. We will be paying compensation during the time of delivery, if there is any delay, (as) per the contract.
What went wrong for Indian carriers?
One word: overcapacity. With the excess capacity, Indian carriers were never able to sell tickets above cost in last 18 months.
Once, big was beautiful for India and the world...
Specifically for India, we have always maintained that there is very little room for a bigger plane. If you are looking at the loads and fare offered, these bigger planes are not able to make money. Even premium carrier Emirates has moved their A380 out of the US to Bangkok.
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First Published: Sun, Jun 14 2009. 08 39 PM IST