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Boeing, Indian airline ink $700 million deal

Boeing Co. has won a firm order for 10 jets from India's Air Sahara, a company official said Monday, as the U.S. aircraft maker doubled its forecast for India's airplane demand amid a boom in the country's air travel.
/ Source: The Associated Press

Boeing Co. has won a firm order for 10 jets from India’s Air Sahara, a company official said Monday, as the U.S. aircraft maker nearly doubled its forecast for India’s airplane demand amid brisk economic growth and a boom in air travel.

The deal with Air Sahara for the Boeing 737-800 jets is valued at $700 million at list price, said Dinesh Keskar, Boeing’s senior vice president of sales for South Asia and Southeast Asia. Airlines frequently receive discounts for large purchases.

Delivery of the planes will start in mid-2009, Keskar said.

Air Sahara, one of India’s leading private airlines, is trying to ramp up operations after a proposed merger with Jet Airways, the country’s largest private carrier, failed two months ago because of a delay in regulatory approval.

Air Sahara’s fleet currently comprises 27 Boeing jets.

“We are proud of the long-term relationship we have had with Air Sahara,” Keskar said.

Air Sahara’s market share in India reportedly dropped to 8 percent from 13 percent after it entered into the merger deal with Jet Airways, but officials at the airline said they are hoping for a recovery.

“This order reflects our confidence both in the growth of India’s aviation market and Air Sahara’s modernization and expansion plans,” said Alok Sharma, the airline’s president.

The availability of low-cost airlines coupled with rising middle-class incomes and a booming economy have led to a surge in air travel in India. Domestic passenger traffic is growing 25 percent annually, driving demand for new jets.

Boeing said it has nearly doubled its forecast for India’s aircraft needs to 856 commercial jets worth more than $72 billion over the next 20 years.

Last year, the Chicago-based aircraft maker had projected India’s demand for new jets over a 20-year period at a little over 470 planes worth $35 billion.

Keskar said recent changes in India’s aviation policy and the success of several budget airlines launched over the past two years contributed to the revision in its forecasts. The economy’s 8 percent annual growth also was a factor influencing the revision, he said.

In 2005, Boeing won orders valued $15 billion at list price from Indian carriers, including an order for 68 airplanes worth $11.4 billion from state-run Air India.