India CMO 2012Indian airlines will need 1,450 new airplanes valued at 175 billion US dollars

Copyright © 2012 Boeing. All rights reserved.

Proprietary: The information contained herein is proprietary to The Boeing Company and shall not be reproduced or disclosed in whole or in part or used for any reason except when such user possesses direct, written authorization from The Boeing Company. The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing. Boeing is a trademark of The Boeing Company.

D906Q4645

Dr. Dinesh Keskar Senior Vice President, Sales, Asia-Pacific and India September 2012

India CMO

2012


Agenda

• Current Market Outlook for India

• State of Aviation Industry

• Air India 787

• Summary


20-year forecast: strong long-term growth

5.2%

5.0%

4.0%

3.2%

Cargo traffic (RTK)

Airline traffic(RPK)

Number of airlinepassengers

World Economy(GDP)

2011 to 2031


Airlines will need 34,000 new airplanes, valued at 4.5 trillion US dollars

2,020 6%

23,240 68%

7,950 24%

790 2%

$80B 2%

$2,030B 45%

$2,080B 47%

$280B 6%

Airplane deliveries: 34,000 2011- 2031

Market value: $4.5T 2011 - 2031


Older, less efficient airplanes will be replaced with more efficient, newer generation airplanes

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2011 2031

19,890

39,780

19,890 Growth

59%

14,110 Replacement

41%

5,780 Retained fleet

34,000


India’s traffic and airplane market outlook

• Very high potential for growth in propensity to travel

• Domestic services have increased dramatically over the last two decades

• Liberalization has had a huge impact on airlines in India and their fleet with considerable growth in the industry and some consolidation

• South Asia will experience highest traffic growth in the world at 8.4% with significant increases in all markets

• India’s airlines are forecast to take deliveries of 1,450 airplanes over the next 20 years valued at about 175 billion US dollars


0

2

4

6

8

10

0

200

400

600

800

1,000

1992 2002 2012

Wee

kly

Freq

uenc

ies,

(000

)

Wee

kly

ASM

s, m

l

Weekly ASMWeekly freq

India domestic air service has increased dramatically over the past 10 years

+96%

+211%

Source: May OAG for each year, India domestic service, jet aircraft

+115%

+162%


Airplane deliveries: 1,450 2012 - 2031

Market value: 175 billion US dollars 2012 - 2031

15 regional jets

1%

1,201 single-aisle

83%

234 twin-aisle

16%

0 large 0%

Airp

lane

units

Marke

t valu

e, $ b

illion

s

$0.5B regional jets

<1%

$114B single-aisle

65%

$61B twin-aisle

35%

$0B large 0%

Indian airlines will need 1,450 new airplanes valued at 175 billion US dollars

0

200

400

600

800

1,000

1,200

1,400

0

20

40

60

80

100

120


• Domestic capacity and demand have come more into balance – Domestic +1.7% RPKs on +2.0% ASKs vs 1QFY2012 – International Significant capacity reductions for Air India, Kingfisher

• Yields have improved significantly

• Higher yields have offset continuing high fuel prices and rupee depreciation

– Jet Airways – INR24.7 crore profit on a INR1134 crore (+31.5%) revenue increase vs 1QFY2012 • Fuel costs increased by INR404 crore over 1QFY2012

– JetLite – INR11.7 crore profit on a INR131 crore (+30.3%) revenue increase vs 1QFY2012 • Fuel costs increased by INR6 crore over 1QFY2012

– SpiceJet - INR56.2 crore profit on a INR521 crore (+55.1%) revenue increase vs 1QFY2012 • Fuel costs increased by INR165 crore over 1QFY2012

– Kingfisher -INR651 crore loss on a 1606 crore (-84.2%) revenue decrease vs 1QFY2012

– Rupee depreciation continues to impact dollar-based costs such as fuel and lease rentals

• Slowing GDP growth, high fuel prices, and a weak rupee are continuing risks

Source: DGCA and Annual reports

State of the Indian Airline Industry 1Q FY13 – Beginning of A Turnaround?


India Capacity Trends Domestic & International Domestic ASK growth is tapering International ASKs declining (due to Kingfisher capacity cuts), but slowing decline recently

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%Ju

n-09

Jul-0

9

Aug-

09

Sep-

09

Oct

-09

Nov

-09

Dec-

09

Jan-

10

Feb-

10

Mar

-10

Apr-

10

May

-10

Jun-

10

Jul-1

0

Aug-

10

Sep-

10

Oct

-10

Nov

-10

Dec-

10

Jan-

11

Feb-

11

Mar

-11

Apr-

11

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec-

11

Jan-

12

Feb-

12

Mar

-12

Apr-

12

May

-12

Jun-

12

India ASK Growth Dynamics

International

Domestic


3.49

2.932.81

2.612.542.47

2.632.84

2.602.49

2.362.40

3.49 3.53.3

3.6

4.01

3.843.643.863.54

3.36

3.28

3.43

2.68

3.323.003.13

2.923.05

3.58 3.713.89

3.51

4.12

3.90

4.49

3.903.97

3.513.633.60

3.693.93

3.323.16

3.343.33

4.88

5.21

4.62

3.913.994.08

4.50

4.19

4.79

3.903.864.09

5.495.275.24

4.534.70

4.965.24

4.865.43

4.624.79

4.50

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0Ja

nuar

y

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Oct

ober

Nove

mbe

r

Dece

mbe

r

Mon

thly

Dom

estic

Pas

seng

ers

flow

n - M

illio

n

200620072008200920102011

3.49

2.932.81

2.612.542.47

2.632.84

2.602.49

2.362.40

3.49 3.53.3

3.6

4.01

3.843.643.863.54

3.36

3.28

3.43

2.68

3.323.003.13

2.923.05

3.58 3.713.89

3.51

4.12

3.90

4.49

3.903.97

3.513.633.60

3.693.93

3.323.16

3.343.33

4.88

5.21

4.62

3.913.994.08

4.50

4.19

4.79

3.903.864.09

5.495.275.24

4.534.70

4.965.24

4.865.43

4.624.79

4.50 4.545.11

5.45

54.82

5

5.29

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0Ja

nuar

y

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Oct

ober

Nove

mbe

r

Dece

mbe

r

Mon

thly

Dom

estic

Pas

seng

ers

flow

n - M

illio

n

2006200720082009201020112012

Domestic passenger traffic growth rates are slowing

Data Source: DGCA


India Capacity Dynamics Frequency increases by India airlines Low-cost carriers continue to grow at impressive double-digit rates

-69%

10%

3%

35%

38%

17%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Jet Airways Air India Kingfisher Indigo Spicejet Go Air

Flig

hts

% Change

June 2012 Change

June 2011


0

200

400

600

800

1,000

1,200

1,400

1,600

2005 2006 2007 2008 2009 2010 2011 2012

Wee

kly

Seat

s Fl

own

(thou

sand

s)

Low Cost CapacityFull Service Capacity

LCC seat share is stabilizing

3% 14%

34%

41%

49% 66%

Data Source: May OAG

86%

66% 59%

51%

34%

97%

67%

33% 30%

70%


High fuel prices are a continuing concern with Indian domestic prices 50% higher than world averages

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000Ja

n-05

Apr

-05

Jul-0

5O

ct-0

5Ja

n-06

Apr

-06

Jul-0

6O

ct-0

6Ja

n-07

Apr

-07

Jul-0

7O

ct-0

7Ja

n-08

Apr

-08

Jul-0

8O

ct-0

8Ja

n-09

Apr

-09

Jul-0

9O

ct-0

9Ja

n-10

Apr

-10

Jul-1

0O

ct-1

0Ja

n-11

Apr

-11

Jul-1

1O

ct-1

1Ja

n-12

Apr

-12

Jul-1

2O

ct-1

2

Fuel

Pric

e - I

NR P

er K

ilolit

er

Fuel Price at Mumbai

$2.06/Gallon March 2009 Low

$6.50/Gallon August 2008 Peak

$4.96/Gallon 1 September 2012

Typical World Price $3.19/Gallon *

* Week of 17 August, Sourced From IATA/Platts

Data Source: Indian Oil Website

India CMO 2012Indian airlines will need 1,450 new airplanes valued at 175 billion US dollars

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