Boeing wants to become No.1 aircraft provider

Boeing wants to become No.1 aircraft provider
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First Published: Tue, Mar 06 2007. 11 43 PM IST
Updated: Tue, Mar 06 2007. 11 43 PM IST
Locked in a battle with Airbus for a share in an international aviation market estimated at $2.7 trillion in the next 20 years, Seattle, US-based Boeing will invest almost $2 billion in India, upping its headcount from under 30 to about 2,000 and hoping that India’s airlines choose Boeing for the nearly 850 planes they buy by 2025.
At the same time, Boeing’s Integrated Defense Systems division will be lobbying hard for the IAF to pick the F/A-18 Super Hornet for the 126 fighter jets it will spend $5 billion on, said Boeing India’s new president, Ian Thomas.
“We’ve been selling commercial jet liners here for 60 years. The last two years have seen unparallelled success,” said Thomas, who holds a Ph.D in history from Cambridge, UK. “But the new trust between the two nations has opened up the defence market in India; (we) want to further develop the market so that we can try to be the preferred aerospace provider in the country.”
Boeing will have to run flatout in a race that Thomas described as a “marathon, not a sprint”. Boeing is expanding fast—so fast that its office walls in a South Delhi high-rise are still bare, and a mouse scurries around Thomas’ office. Already, European Aeronautic Defence and Space Co.-controlled Airbus has a lead—it won 70% of India’s civil aviation airplane orders in the last two years. Airbus’s best-selling planes are smaller and cheaper; therefore much favoured by low-cost carriers, which bought 288 planes with a market value of about $22 billion.
Boeing sold 68 airplanes to Air India and about 20 to Jet Airways, with other sales adding up to 118 orders for about $20 billion. Thomas estimated that India made up a little under 8% of Boeing’s annual revenues during the same time.
Even though India and China will be the fastest-growing markets, the Indian aviation market is still miniscule. All of India’s airlines combined have less than half the number of airplanes that a major international airline like Deutsche Lufthansa AG operates (about 550). But fast growth in the liberalised aviation sector means that India’s airlines will buy almost one of every 27 airplanes sold in the next 20 years, spending nearly $72 billion.
That’s big business for Indian companies too: the 68-aircraft deal with AI, with a market value over $11 billion, requires that Boeing invests $1.7 billlion in India. Thomas said Boeing will present initial plans to the commerce ministry in the next two months.
Boeing has already announced a $100 million maintenance, repair and overhaul facility in Nagpur, and $85 million for a pilot training centre and grants for pilots. Boeing’s challenges in the military market in India are far more daunting. The Air Force has often chosen Russian-made aircraft, mostly because of price, but also because Russia allows its fighter-jet manufacturers to transfer technology to India, and to participate in joint productions like the Sukhoi-30MKi. “US (companies) have so far not dealt with such a big order,” said K. Subrahmanyan, the former head of the National Security Council’s Advisory Board. “So they have to decide whether they are willing to compete and share technology like Russia.” Defence markets are shrinking worldwide, said Subrahmanyan, and with India and China emerging as the only key buyers, India could bargain hard. For American companies, sharing technology is regulated by the US government — a process that Thomas said Boeing was lobbying to change.
(mehul.s@livemint.com)
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First Published: Tue, Mar 06 2007. 11 43 PM IST
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