By Bikram Vohra
Hello Paris, here comes India…this is not said lightly. The airshow week at Le Bourget should be exciting, and this time around, India will have a formidable presence as a seller and a buyer. Most of all, it will be opening its doors to all sorts of partnerships, especially those that stretch to establishing bases for production in the country.
No manufacturer, supplier or ancillary unit engaged in aviation work can afford to overlook the subcontinent’s lead role in the post-Covid comeback. Walk with us as we tell you why to Make in India is not just a clever slogan but a diktat that comes with the promise of mutual benefit and could well be the major talking point at Le Bourget.
Le Bourget has opened a new Hall and expects a major increase in numbers. The USA itself is fetching up with a representation of 400 companies engaged in aviation and its ancillaries. For years, these air shows have been flagged off and covered by the media as shop fests for buying aircraft. That is not essentially true anymore, and between now and Farnborough last year, there have been mega sales, and any major announcements are unlikely to be more than standard fodder for good headlines. With the Air India order of a total of 570 aircraft, there are others like China Airlines, Lufthansa, and Oman Air who have also announced their demands.
Boeing delivered 480 airplanes and won 774 net new orders in 2022. Airbus delivered 661 jets and won 1,078 jet orders. In 2023, 1,149 (75%) of deliveries are expected to be narrowbody jets compared to 213 widebody jets (14% of the deliveries). The A320 and Boeing 737 Max families will hold the fort.
By that token, Turkish might steal the thunder with a massive 600 aircraft deal that is expected to break down into 400 narrow bodies and 200 wide bodies. The airline might opt to make its announcement in Paris. We can also expect orders from All Nippon, Emirates, Air France, Thai and JAL to augment and replace their ageing fleets, but they may not all be announced at Paris like Indigo, and Akasa might keep their powder dry for now.
You do not need more. Both Airbus and Boeing are loaded to the gills where the assembly lines are concerned, and that abundance will take the sting out of their not-always-pleasant slanging match for which their two respective press conferences are the much sought-after venues. Though Airbus has led the race these past four years, Boeing’s game of ‘catchup’ has given them an edge in 2023. However, even the numbers game is of little interest, and unless it gets up close and personal, these two events will be more of a muscle-flexing ‘look at us’ exercise. Getting more than just a look in will be Embraer with its EJet fleet.
Against this backdrop, there is now an acceptance that airshows are not where planes are sold, although that is the public perception. Alliterative headlines, and big blasts of publicity with reference to purchases tend to obscure some real action occurring off this grid.
It is more the nuts and bolts and the deals for parts in the equipment that is where the big bucks go. It is relatively dull to write about flanges, cowlings, and avionic elements, so these largely go unnoticed.
This is why India will arguably be the biggest draw in Paris. The India Aviation Market size is poised to rise from $10.47 billion in 2022 to USD $12.55 billion by 2028, at a CAGR of 2.87% during the forecast period (2023-2028). This is a conservative estimate and could be much higher. With 13 new airports under construction and its UDAN initiative, earmarking 425 airports in the long term with 425 new routes and a 1000 percent uplift in the next two decades, imagine the amount of equipment and hi-tech systems needed. A simple screw would run into millions of dollars for the chosen manufacturer. Besides aircraft maintenance and a mountain of spare parts, communication is a major area and inside those Halls is where the hum of business being done will be the loudest.
Air Traffic Control (ATC) to be established, runways to be made, ramps and jetways to be constructed, airports to be designed and built, and security to be trained, it is a huge market, and it is just one country. I could list a thousand items but let us go with one item to illustrate why India holds the aces. You need runway lights and beacons at inner and outer markers and a deal to keep them functioning properly. Vista systems are designed for non-instrument runways or non-precision approach runways, which would suit rural airports. French manufacturer of Aircraft Obstruction lights Delta Box pushes its stuff for diurnal and/or nocturnal flights to fit the requirements of the International Civil Aviation Organisation (ICAO).
There is IAVNA, ADB Safegate, AbAcus, Castle and Pryor, a dozen more, and they would give their eyeteeth if they could make a deal with Indian authorities. Amglo Kemlite Laboratories, AeroLEDs, Larson Electronics, and Hoffman Engineering, will all be there and will be delighted to be noticed by the Indian delegation.
The cost of wiring alone will be more than that of a Jumbo jet and will girdle the globe several times over.
This is just one aspect. Multiply that by ten thousand items, if not more, and you get to realise how much frenetic business there is in the halls, not the chalets. After you read this and are intrigued enough, walk the Halls and take in airshows from their real perspective.
Now, we have already seen how Boeing and Airbus are moving into India with more than mere offices. Boeing is committed to inspiring the next generation of talent in India and development of skills to strengthen the aerospace ecosystem in India. Boeing President Brendon Nelson puts the intent succinctly: “Boeing now has 5,000 employees in India. Our 300 suppliers, in turn, employ about 13,000 Indians, about a quarter of those in micro and small and medium-sized enterprises. The first country that I have come to since I had the privilege to assume the responsibility of being president of Boeing International is India, and you can expect to see me here quite a bit over the next few years.”
Boeing enjoys 300 strong links in its supply chain in the subcontinent with a global support centre. It also buys $1 billion in spare parts, while Airbus purchases $700 million. Airbus also has a partnership with Tata to assemble 40 C295 planes in Gujarat and make that State an aerospace hub.
India is pushing the buttons and sending out strong messages. The “time has come” to assemble jets in India, Minister for Aviation Jyotiraditya Scindia said in March. He indicated in a Reuters report that conditions were ripe for a “leap of faith” by both jet makers as India’s fast-growing aeronautical industry reached an “inflection point,” one which is highlighted by plans to assemble Airbus C295 military transport planes locally in India. This is less a threat than an objective appreciation of India’s powerful gambit on the aviation chessboard. Paris provides an excellent platform for Indian aerospace companies to display their capabilities, attract investment, and forge partnerships with international players.
One of the other aspects is that of creating a turboprop fleet for regional access. According to ATR, in the next 20 years, the global turboprop demand should reach around 2,450 aircraft. Aircraft replacement will be a primary driver of demand over the next two decades, accounting for 1,500 new aircraft in service in 2041. India is again someone to woo, especially if a manufacturer decides to put the plane together in the country.
ATR goes on to make a valid point. Increasing fuel prices and carbon taxation, combined with greater passenger demand for lower-emission travel means in future, the aviation industry will naturally favour low-carbon emitting aircraft, such as turboprops. This consideration could well be up there in Scindia’s mind. Alliance Air, FlyBig and Star Air are joined by Fly 91, and props could well be the best option. Alliance already has its ATR fleet and is doing well enough.
Let us step back a moment from civvy street and see how India’s strong defence industry and an import expenditure over the past five years of $24 billion is exceptionally attractive. On the shopping list are helicopters, aircraft radars, rockets, guns, assault rifles, missiles and ammunition from countries like the US, Russia, France, Israel and Spain, among others. This year the budget is $4.8 billion and flexible.
Add to the flip side of the cake with export potential, and a cherry on the cake is the BrahMos supersonic all-terrain missile system currently in discussions with 12 nations. Enough to know, India is also now a player of note on the export bandwagon. At Paris, the number of probables for the BrahMos could change.
India’s defence budget is US$ 72 billion, which is 13% more than the budget for 2022-23. Open to offers for state-of-the-art equipment, even a percentage of this sort of allocation makes her a major ‘shopper’ in any airshow.
India has another major dimension to share in Paris and continues its relevance in the long run. Her Space Technology and Research wings have flown high and true with successful missions to Mars (Mangalyaan) and the Moon (Chandrayaan). The Indian Space Research Organisation (ISRO) is now a major player in the journey to space. At Paris, India will be in her element marketing satellite launches and its wider capabilities. Space exploration and India are now synonymous. With over $1.1 billion marked for research and development this year, the space programme becomes very attractive to foreign companies.
There is no doubt that the ‘Make in India’ initiative, a favourite of the present government, is the key to collaboration. Those foreign entities that establish concrete setups in India and contribute to the commonwealth and to employment as well as become integral to the concept of assembly and manufacturing from scratch, will be given precedence.
With all these factors in play, there is little doubt that the message is clear and will be heard at Le Bourget unless, of course, it has already been registered in the more pragmatic organisations.
In capsule, there is going to be a fair amount of activity by India and for India at Le Bourget, and with good reason. Not all of it will make headlines, but the tedious never does. India can happily leave the sizzle to the others and stick with the steak.
Bikram Vohra is a Consulting Editor at IADB