Bangalore: Dinesh A Keskar, who heads the Indian operation of Seattle-based aerospace company Boeing, feels the wide gap between actual fare and the breakeven fare in the domestic market is closing and the two will meet next quarter.
This, along with climbing air passenger traffic over the last few months, will lead to "sustainable and profitable growth" for the Indian carriers, which have accumulated huge losses due to declining air travel demand and low yields (net revenue per seat) over the last two years, he said.
"As per our (Boeing) study, historically, there was always a gap of $20-40 per passenger between the breakeven fare and actual fare in the domestic (Indian) market. That gap is below $10 per passenger now and is going to meet in the coming quarter," India's Boeing chief told DNA Money.
Keskar said once fares reach the breakeven level and fly into the positive zone, the airlines will stop burning cash and will start making money from their operations.
"I do see breakeven (in fares) in the next quarter. I also see sustainable and profitable growth provided nobody starts undercutting," he said.
Keskar also said the US aircraft maker will not begin work on maintenance, repair and overhaul (MRO), which will be built along with Air India, before next year. The work on the greenfield MRO for Boeing 787s and 777s type of aircraft was to kick off in this quarter.
"As you know, the 777s have come in but the 787s have not. One thing I have said very clearly is that we don't want to create a situation where we have built facility and there is nobody to use it. I can get going only next year," he said.
According to him, they had not even started preparing the final blueprint of what a "100 metre X 100 metre" hangar would look like or what shops would be in it. That's because the two partners, Boeing and Air India, want to create the MRO facility only when the 787s and 777s were ready to go to the aircraft service shop.
"Now the 787s are only going to be delivered in 2011. After that, it would take another two-three years before the planes will be taken to a MRO. If that is the case, why do I need to spend $100 million and build a white elephant which nobody is going to use (now)," he said.


