Bombardier set to make inroad in India

MONTREAL — Bombardier’s efforts to tap into the Indian transportation market is bearing fruit after discount carrier SpiceJet said it plans to spend about US$900 million to order 30 Q400 NextGen turboprops.

MONTREAL — Bombardier’s efforts to tap into the Indian transportation market is bearing fruit after discount carrier SpiceJet said it plans to spend about US$900 million to order 30 Q400 NextGen turboprops.

The airline informed the Bangkok Stock Exchange that its board approved an initial order for 15 planes with an option for 15 more on Tuesday, with deliveries beginning in the second quarter.

The airline’s new CEO told reporters in New Delhi that it plans to more than double its fleet in about three years. It currently flies 22 Boeing 737s to 18 India cities.

“We believe that the enormous potential in the Indian domestic market can be further tapped by enhancing regional connectivity,” Neil Mills said.

Founded five years ago, it is India’s fifth largest carrier and second-largest low-fare airline with about 12.8 per cent market share. It launched service to Nepal and Sri Lanka in October and services 22 destinations in India and the neighbouring countries.

SpiceJet placed a US$2.3-billion order in July for 30 Boeing planes that will begin to be delivered in 2014.

Bombardier spokesman John Arnone said no agreement has been signed, but acknowledged that the company was in talks with the SpiceJet.

“We look forward to finalizing a purchase agreement for Q400 aircraft,” he said in an interview.

Bombardier (TSX:BBD.B) has CRJ planes in operation in the world’s largest democracy, but this would mark its first delivery of new Q400 turboprops.

“As a market, we’re very bullish on the potential for our aircraft in India. It is a market that has the ideal conditions for any one of our three family of aircraft — Q400, CRJ as well as CSeries,” Arnone said.

Bombardier forecasts that India will increase its fleet of between 20 and 149 seat aircraft from 120 to 650 aircraft in the next 20 years.

India’s soaring economic growth is expected to support increased air travel, with passengers nearly equal to twice Canada’s population taking to the skies over the next decade.

Bombardier is also bidding on several lucrative rail contracts in India.

The Centre for Asia Pacific Aviation estimates that by 2020 India will have between 160 million and 180 million domestic passengers and 80 million international passengers annually.

Airlines will need to invest US$120 billion in new aircraft with another US$20 billion being spent on airports.

Aerospace analysts said the order should secure the production rate through the end of January. Bombardier is on pace to produce about 55 planes per year. It has firms orders for 73 planes.

“We view this contract positively given it reduces the likelihood of further Q400 production cuts,” wrote Benoit Poirier of Desjardins Securities.

Cameron Doerksen of National Bank Financial added that the order should help Bombardier to make further inroads against French-Italian rival ATR, which has held a dominant position in new sales in India.

“Securing a new customer in the high growth Indian market positions Bombardier well for future orders in the country,” he wrote in a report.

ATR has secured 110 global orders for its ATR72 turboprop between Aug. 1, 2008 and July 31, 2010, compared to just 76 for Bombardier.