AIRSHOW-Raytheon to roll out new India air-traffic system this year

* GAGAN system could cut fuel costs 20 pct - executive

* Indian carriers struggling under huge fuel costs

By Anurag Kotoky

BANGALORE, Feb 8 (Reuters) - U.S. group Raytheon will roll out a new satellite-based aircraft navigation system in India this year, a move that could save airlines up to 20 percent in fuel costs.

"To get 20 percent on fuel burn is an enormous opportunity for airlines. It makes or breaks their business model," William Blair, president Raytheon Asia, told Reuters on Friday.

High fuel costs and taxes have battered India's airline industry in recent years, with carriers in what was seen as one of the world's most promising aviation growth markets struggling to turn a profit and running up large debts.

India contracted the U.S. defence and aerospace company in 2009 to build an air traffic control system allowing point-to-point flights instead of aircraft having to fly close to land-based control towers.

A 20 percent fuel saving is the amount U.S. planemaker Boeing says its $200 million Dreamliner jets provide compared to equivalent aircraft.

"There is a business model and a business value for the airlines, and also for civil aviation and Airports Authority of India," Blair said in an interview at an airshow.

The system, named GAGAN, uses three satellites and will be the first to run on Raytheon's new algorithm for equatorial regions. Blair would not give details of its cost.

India permitted airlines to import jet fuel directly last year to ease their costs by allowing them to avoid buying fuel from oil marketing companies.