Airbus and Boeing: An inversely proportional relationship in India

The Indian aviation industry is booming. The US-based aircraft manufacturing giant Boeing has lost ground to European plane maker Airbus in India. Indian low-cost carrier IndiGo on Monday placed an order for 500 Airbus A320 family aircraft while Air India placed an order for 250 Airbus aircraft on Tuesday.

Boeing has acquired a third of new aircraft orders from India in the past 18 months, per data compiled by UK-based analytics firm Circium. Its market share fell by over 50 per cent in the past decade standing at 23 per cent by the end of 2022.

Boeing v/s Airbus

Airbus has dominated the Indian market with its single-aisle, narrow-body A320 family aircraft. However, Boeing has a 100 per cent market in the wide-body range in India, however, narrow-body make up more than 80 per cent of India's aviation market.

Air India continues to use the Boeing 787-8 Dreamliner, the 777-200LR and the 777-300ER for its long-haul operations while its low-cost subsidiary, Air India Express operates the Boeing 737-800. The Tata Group-backed carrier signed a deal with Boeing on Tuesday at the Paris Air Show for 220 aircraft, including 20 787-9 Dreamliner and 10 777X making for its widebody fleet and 190 737 MAX for its narrowbody fleet. 

SpiceJet and Akasa Air operate a fleet of Boeing 737 aircraft however its largest operator, Jet Airways, went bankrupt in 2019. Due to its financial difficulties, fewer planes were being delivered than expected, which impacted demand.

The Fall of Boeing

2014 saw the introduction of the 737 MAX, which gave Boeing an unexpected boost. To replace their 737NGs and expand their market share, SpiceJet and Jet Airways placed orders for 200 aircraft each.

However, with the fall of Jet Airways and the worldwide grounding of the 737 Max aircraft between March 2019 and December 2020 due to two crashes that claimed 346 lives on October 29, 2018, and March 10, 2019, Boeing's (at the time) market presence in India vanished.

Boeing 737 MAX 8 of Akasa Air | Image: Akasa Air

Vinamra Longani, an aviation expert, head of operations at Sarin and Co said, "India is a high-cost, often low-yielding market with profits hard to come by. Despite this, stakeholders continue to invest in the hope of returns in the long run."

Lessors swiftly seized aircraft, the number of operating 737s decreased by more than 50 per cent, and Boeing's order book for the MAX was cut in half almost immediately. SpiceJet's expansion was hampered by having to stop MAX deliveries. Even though the low-cost airline took on close to 30 737NGs, these were only temporary while the MAX was still grounded.

The Rise of Airbus

Airbus saw far better sailing in India than Boeing, which had to deal with crisis after crisis. The operations of Air India (narrow bodies), GoAir, Vistara, AirAsia India, and IndiGo were all wholly dependent on the Airbus A320 family. These airlines have placed orders for more than 800 aircraft, with IndiGo serving as Airbus' top international client.

The A320neo has overtaken every other aircraft in India as the most widely used model. In the meantime, the popularity of the 737 has gradually declined in recent years. Additionally, Airbus opened multiple training facilities in India; hence, finding pilots who can operate an Airbus became simpler.

Due to a troublesome SpiceJet and a stagnating Air India Express, 2022 changed the game just as Boeing was wrapping its balance sheet. Akasa Air placed an initial order for 72 737 MAXs by the end of 2021. Last year, delivery sped up and the airline has since received an astounding 19 aircraft. 

Less than 15 per cent of India's operating narrowbody aircraft are 737s as of right now. A significantly larger 85 per cent is accounted for by the A320 family. What remains unclear is whether Boeing will be able to fill the gap as Airbus penetrates more in the world’s third-largest aviation market.