Boeing (BA) Sees Indian Plane Traffic Market with Highest Passenger Growth

Boeing (NYSE:BA) said it sees India being the fastest growing market for airline passenger traffic growth over the next two decades, as measured by percentages, outgrowing even China in that regard.

Including all of South Asia, which entails India, Boeing estimates growth to be at an 8.4 percent annual clip. China is expected to grow at a rate of 7 percent during the next 20 years.

As for the number of aircraft expected to be acquired by India, Boeing sees them needing about 1,450 new planes to serve the growing market by 2031. That could generate $175 billion in sales.

Even though time frames are difficult to project into, as the Indian air traffic market has shown over the last year, where it dropped by 1.1 percent in July from 2011, in general these numbers should hold pretty well, although it's certainly possible a couple of years could be slashed or added as to when the planes will be acquired.

Other questions have also arisen over the competitiveness and management of Indian airlines, as strong competition has resulted in prices being slashed, which has led to low margins. Also a factor is the rising cost of jet fuel and the outrageous taxes imposed by the government of India.

India's other major problem is its anti-business stance which makes it extremely difficult for companies to successfully do business with the country.

Boeing has yet to deliver the first of its 27 Dreamliners ordered by Air India, which is owned by the government, as an ongoing dispute over compensation Boeing should pay from production delays which resulted in the delivery schedule being altered weighs on the deal.

Also of note is makers of planes have been battling fiercely for market share, which has resulted in them cutting prices up to 50 percent for some plane models in order to win business.

Airbus recently won a major $7 billion deal from Philippine Airlines Inc, leaving Boeing with nothing to show for intense lobbying by the United States on behalf of the company.