Supply Chain Woes Delay Aircraft Deliveries to Indian Airlines

The Indian aviation industry is facing supply chain challenges that are likely to impact aircraft deliveries to domestic airlines. According to a report by credit rating agency Icra, Indian airlines have a total order book of around 1,700 aircraft, which is more than double the size of the current fleet. However, the deliveries are expected to be gradual over the next decade and will be affected by the current supply chain issues faced by engine and aircraft manufacturers.

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India's Growing Aviation Market and Expansion Plans

India is one of the fastest-growing civil aviation markets, and domestic air traffic is on the rise. Airlines have responded to this growth by embarking on ambitious expansion plans. Since February 2022, Akasa Air, Air India, and IndiGo have placed orders for a combined 1,120 planes. In January 2023, Akasa Air ordered 150 Boeing 737 Max planes, while Air India and IndiGo placed orders for a total of 970 planes with Boeing and Airbus.

Challenges Faced by Boeing and Pratt & Whitney

Despite the strong demand for aircraft, Boeing is facing issues related to its 737 Max aircraft, while engine maker Pratt & Whitney is experiencing problems with its engines. These challenges have contributed to the supply chain disruptions that are affecting aircraft deliveries.

Replacement of Old Aircraft with Fuel-Efficient Ones

A significant portion of the 1,700 aircraft order book is for the replacement of old aircraft with new fuel-efficient ones. This move is aimed at reducing operating costs and improving the environmental sustainability of the aviation industry.

Impact on Industry Capacity

The recent engine failures and supply chain challenges have resulted in the grounding of aircraft for select airlines, impacting overall industry capacity. Suprio Banerjee, vice president and sector head for corporate ratings at Icra, highlighted the implications of these challenges on the industry's capacity, as measured by Available Seat Kilometers (ASKMs).

The supply chain challenges faced by aircraft and engine manufacturers are expected to have a significant impact on aircraft deliveries to domestic airlines in India. While airlines have ambitious expansion plans to meet the growing demand for air travel, the gradual nature of deliveries and the ongoing supply chain issues will likely shape the trajectory of the Indian aviation industry in the coming years.