India's Burgeoning Civil Aviation Market And The Prospects For Boeing And Airbus

LD Investments profile picture
LD Investments
2.63K Followers

Summary

  • An expanding middle class and supportive government policy has helped India’s air travel sector enjoy robust growth and this is expected to continue.
  • Airbus dominates the single aisle market and is poised to benefit from India’s domestic aviation sector growth.
  • Boeing dominates the wide-body market and Indian airlines’ appetite for international expansion is an opportunity for the US plane-maker.

Please take note this is only one aspect in weighing the attractiveness or non-attractiveness of the companies mentioned as an investment and should not be used independent of other factors. This article examines one segment of the companies' businesses, and other factors such as valuation are not addressed. This article is not a recommendation to buy or sell any stock mentioned.

Civil aviation is a sunrise sector in India, and competition is intensifying between Boeing (NYSE:BA) and Airbus SE (OTCPK:OTCPK:EADSY) (OTCPK:OTCPK:EADSF). While Airbus looks well-positioned to capture the narrow-body segment, the competition looks stiff in the wide-body segment, with both holding the potential to capture a decent share.

India’s air travel market has been enjoying steady growth, with the number of passengers doubling since 2006.

Source: The Hindustan Times

With 131 million passengers in 2016, India jumped four spots in as many years in the global air traffic rankings according to data from the International Air Transport Association (IATA).

The buoyant market has helped India’s major airlines post profits after years of losses.

Source: Bloomberg

India is expected to continue enjoying robust gains in air passenger volumes going forward, driven by a growing economy, an expanding middle class and supportive government policy. Last year the Indian government overhauled the country’s aviation rules, liberalizing norms for domestic carriers to fly overseas and putting forward regional connectivity schemes such as UDAN, all in an effort to boost air travel among India’s expanding middle class, bolster competition and support regional connectivity.

Source: WeForum


The potential has not gone un-noticed. With India emerging as the world’s fastest growing major aviation market, the country is among the battlegrounds in emerging markets for plane-makers Boeing and its European rival, Airbus.

Fourteen years ago, Air Deccan ushered India to the era of budget air travel. Today, India’s low-cost carriers dominate

This article was written by

LD Investments profile picture
2.63K Followers
Long only, focused on high quality businesses with economic moats and solid business fundamentals. Sector and geography agnostic. Long term investment horizon. None of the articles constitute investment advice.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (23)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.