There'll always be a robust startup ecosystem for airlines in India: Salil Gupte, president of Boeing India

Salil Gupte took over as president of Boeing India in 2019. Image: Marian Lockhart, The Boeing Co

For Salil Gupte, the timing couldn’t have been any worse. A long-time executive at American aircraft manufacturer Boeing, Gupte made the shift to New Delhi from Seattle to head the Indian arm, just as the aircraft maker became embroiled in one of its worst crises ever.

The Boeing 737 Max, the company’s flagship narrow-bodied aircraft, had been involved in two major accidents, killing over 300 people, that eventually forced the US FAA (Federal Aviation Administration) to ground the aircraft in March 2019. It took almost a year and a half before the aircraft could fly again. But, by then, another turmoil had begun. The Covid-19 pandemic, which wreaked havoc globally, had hit the global civil aviation industry the hardest as airlines were forced to ground their airplanes.

Today, four years since he became president of Boeing India, the aircraft maker finds itself on a stronger footing than before in the country. Akasa Air, which began flying in August last year, chose Boeing to begin operations with and placed orders for 72 aircraft. Air India, which is in the middle of a turnaround under the Tata group, ordered 220 aircraft with Boeing, the bulk of which is for the narrow-bodied 737 Max aircraft.

Separately, the company has been cementing its position in the defence sector, and today operates some of the key aircraft for the country’s defence forces, including the C17 Globemaster, P-8Is, and the Chinook and Apache helicopters, as the US-India defence ties get stronger.  

In an interview with Forbes India, Gupte outlines Boeing’s plan for India, the domestic demand for aircraft, partnering with MSMEs, setting up an assembly plant in India, and the opportunities in the defence sector. Edited excerpts:
 
Q. What’s your assessment of where India’s aviation market is currently?
The Indian market is an opportunity like no other, not just because of the opportunity to serve civil aviation and defence customers, but also because of the capability to support aerospace globally—both in engineering and manufacturing.

India is growing into the third-largest civil aviation market in the world and that is being driven by the growth of the middle-class population, which across the world always drives demand for air travel, and rising disposable income that tends to be spent on travel.

You combine that with the government’s focus on building additional infrastructure to support air travel and connectivity, and you get a burgeoning market for civil aviation. India was one of the fastest markets to recover from the pandemic surpassing the pre-pandemic levels.

Also read: How Air India's million little steps are taking it on a journey to find lost glory

From an airplane standpoint, we see 2,200-plus aircraft coming into the Indian market over the next 20 years which is going to necessitate a lot of infrastructure, not just in terms of airports, training, and MRO (maintenance, repair and operations), but also in terms of human capital. India will need 31,000 more pilots and 26,000 mechanics to fly and maintain all those airplanes.

Q. How many of those 2,200 aircraft are you looking to sell?
We certainly want to win all of it. That’s always our goal. But you must keep in mind that a significant portion of those 2,200 aircraft have already been sold. But there are also significant opportunities with startups that we have supported like Akasa and there are airlines in India that do not own Boeing airplanes yet which we will continue to pursue.

Also read: Akasa Air is on an unprecedented flight plan. Can it really redefine flying in India?
 
Q. What about the growth potential in the defence sector, especially with the focus on Make in India?
India is already one of the largest defence investors in the world and finds itself in a complex region. The Indo-Pacific region is a part of the world that is strategically very important to all major powers. Being a critical partner of the US and as a member of the Quad with Japan and Australia means the capability that India needs to defend itself and contribute to the security and stability in the region will drive a substantial amount of investment and capital expenditure in the years and decades to come.

So, the defence opportunity is there and increasingly much of that will be developed in India and all the OEMs will have an opportunity to leverage capabilities in India and be part of that co-development journey. Part of the reason that co-development capabilities are exciting for Boeing is that we have the largest supply chain manufacturing presence here with over 300 suppliers and $1 billion worth of sourcing. So that’s a tremendous base for us to draw on.

Also read: Make in India: How HAL is gearing up to deliver

Q. The aviation minister had recently remarked that it’s time for Boeing and Airbus to set up jet assembly plants in India. What are your thoughts?
People tend to talk a lot about the final assembly because it’s very visible. But in aerospace, that is a very small part of the overall value system. This is not like an iPhone. People are very focussed on the final assembly for smartphones because a huge part of the value comes at that point and the entire ecosystem grows around that final assembly.

That is not the case in aerospace. In aerospace, the value is in what India is doing and where India is successful. The value is in the components, parts for the engines, and intellectual property and development activities for aerospace. The assembly, in value terms is about 6-7-8-9 percent of the aircraft, depending on the type of aircraft. Our goal is to move it more and more upstream and use next-generation manufacturing technologies like full-scale determinant assembly to ensure that more and more of that value stays upstream, so that the final assembly takes less time and can be done more efficiently.

So, Make in India and final assembly are two very different things. Make in India is something that India is already excelling in today and that is where our focus has been and continues to be.
 
Q. Would that mean partnering more in India to source?
Of course, we are always looking to grow more partners. We already have more partners than anybody else and we partner with a lot of the giants and conglomerates such as the Tata group with whom we have a joint venture in Hyderabad for the Boeing 737 Max vertical fin and the fuselage for the Apache helicopter.

But in addition to those large players, we’re also focusing on the MSMEs. We have over 75 MSMEs in our cohort of 300 suppliers and that is a very important focus area because the next generation of great Indian manufacturers will also come from those MSMEs. So, expanding that is a critical part of what we do. If you look at our supply chain here in India, it has grown five or six times in the last four years and it will probably grow 10x in the next couple because our focus is on supplier development, bringing more suppliers, and developing the capability of the suppliers that we have so that they can continue to move up the value chain from simple assemblies to complex assemblies and working with advanced materials like composites.

Also read: 6 ways India's MSME sector can be made stronger

Q. When it comes to the defence sector, are there specific areas you are turning your attention to?
We have a broad-based area of expertise when it comes to defence, because we have a very substantial portfolio in India already with the C17 cargo aircraft, the P8 anti-submarine warfare aircraft, the Apache attack helicopter, and the Chinook transport helicopter. There is also the entire narrow-body and wide-bodied head-of-state fleet with Boeing 737 and 777.

All that helps us in building the ecosystem to sustain those products, because you need to have exceptional operational readiness for the defence services. Just having the platforms in the country isn’t enough. It’s also about having the best supply chains and the best MRO to support that. So that is the top priority and that’s something we’ve already invested in.

Beyond that, it is supporting the government in its co-development efforts on the next generation of products that will be developed in India whether that’s rotorcraft or autonomous vehicles, ensuring that we have an excellent foothold in product development as well.

Also read: How Tata Advanced Systems Limited is advancing the Tata group's aerospace and defence dreams
 
Q. With another airline going down, and the market becoming a duopoly between Air India and IndiGo, how do you see the market taking shape?
You’re seeing in the market a certain maturity that occurs in any lifecycle of aviation development. As the market becomes more mature, as air fares move to a more mature level, you will see some consolidation in the market. You also see new startups emerging to serve certain parts of the population or geographies or create their hubs or focus areas in certain parts of the country.

We’ve seen this play out in places like Indonesia and China, and you will see it play out in India as well because the scale of the market and the breadth of geography here mean there will always be opportunities for new entrants to offer a certain type of service or product. Therefore, there will always be a robust startup ecosystem for airlines here in India.

The amount of progress India has made in a relatively short period is breathtaking. The journey of aviation and aerospace at many of the countries that India compares itself to took place over 50 years, especially in manufacturing. India is still new in that journey and it’s certainly exciting in terms of the future.