Boeing (NYSE:BA) recently delivered its first 787 Dreamliner to Air India after a delay of nearly four years.^[1] The state-owned airline of India had ordered 27 B-787 Dreamliners in 2006 to use them as a mainstay of its international operations, but the delay which resulted in a public spat between the parties was finally settled. The airline is scheduled to receive 5 more of these airplanes by December and the rest in four years through 2016.

At a broader level, the commercial aviation market of India is very important to Boeing as India is expected to become one of the largest in the world in the coming decades. And, thus it holds a lot of growth potential for Boeing and its major European rival, Airbus. Currently, Boeing and Airbus hold nearly equal market share in the Indian commercial aviation market. But, Airbus leads Boeing by more than three times in terms of number of new orders for commercial airplanes from India.

We currently have a stock price estimate of $75 for Boeing, approximately 5% above its current market price.

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Commercial aviation market of India

India is forecast to be the second largest market within Asia-Pacific after China requiring 1,450 new planes worth $175 billion over the next two decades.^[2] Boeing anticipates air-traffic in the country to grow at 8.4% per year over the same period, one of the fastest in the world. At present, passenger traffic is growing at 7.2% in India, above the average growth rate of 5.9% in Asia-Pacific and the global average of 4.8%.^[2] Sustained economic growth has led to growth in its domestic businesses and a rising middle class with disposable incomes, and this is fueling the demand for air travel.

Boeing Vs Airbus in the Indian aviation market

Of the five largest airlines of India, namely Air India, IndiGo, Jet Airways, SpiceJet and GoAir, five are domestic private carriers and Air India is the only state-owned carrier. And, the combined fleet composition of these airlines is equally balanced between Boeing and Airbus. However, in terms of new airplane orders, Airbus has 303 from these five airlines while Boeing lags behind at 86.^[3]^[4]^[5]^[6]^[7]^[8]

Thus, with the delivery of its first Dreamliner to Air India, Boeing needs to increase its focus on the commercial aviation industry of India so as to gain a greater share of new orders from its airlines. And thus be able to maintain its current market share in the Indian commercial aviation industry.

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