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Jayant Mundhra

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Dexter Capital Advisorsย โ€ขย 1d

Since Trump slapped 50% tariffs on us and called us a DEAD economy, many have foolishly called on the Indian government to ban the use of Boeing planes. And this is just so stupid, and a clear sign of zero understanding of how this will hurt India more. Let me explain. .. Every Indian airline primarily works on the same principle. - Place big orders spread over the years to get big discount per plane - Pay a small part of the bill value in advance to book the delivery slots - because production capacity is limited and you donโ€™t want growth to take a hit - As you keep receiving the planes, sell them at a markup to lessors, and then lease them for 10/12 years .. Now think this way. Saying no to Boeing woudl create what problems? 1 - Suddenly, all the token fee already paid by Air India and Akasa to Boeing for those massive orders of 200+ planes each would go to zero - Net loss 2 - They will now need Airbus planes - for which delivery slots are no longer available up to 2032 - Meaning, apart from planes you already had on order with Airbus (yes for Air India, no for Akasa), you have no options 3 - This will mean there would not be enough planes to service the ever-growing demand for civil aviation in India, which will drive a big demand-supply mismatch and push up flight ticket prices in India - And also slow down growth 4 - This will further increase IndiGoโ€™s market share beyond the present 65% mark, because it has enough Airbus planes booked (as it only operates Airbus) .. Now, I know, there would be some who would say, even if Air India, Akasa, Spicejet, etc, canโ€™t acquire additional/fresh Airbus jets due tpo unavailability of slots, they can lease planes from the market. But, common sense - this will push up the demand for the number of Airbus planes available in the markets (which wonโ€™t change) - and hence also push up the cost to get them. .. So, will banning Boeing planes help Indiaโ€™s cause against the US (particularly Trump)? No. It will only enrich Airbus and its European owners. - What we need is to find areas where we have substitutes, or potential to build substitutes for US tech, be it in hardware or software - And frankly, that is again impossible as on date, because our priorities have never been in line with that agenda, while in Chinaโ€™s thatโ€™s quite been the sole focus in last 15yrs. And the result is pretty palpable Thus, letโ€™s demand focus on correcting this bit, and not birthing new problems that slow us down, and hit avg Indianโ€™s already small pockets. No?

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