Air India is seeking to expand its operations and modernise its fleet. [File: Francis Mascarenhas/ Reuters]
In an effort to meet the rising demand for inexpensive air travel from the nation’s expanding middle class, Air India has placed orders for 470 Boeing and Airbus passenger jets.
The top domestic and international airlines in India are purchasing 250 passenger jets from Airbus of Europe and 220 Boeing aircraft worth $34 billion.
The purchase of Boeing ranks as the second-largest sale of all time in terms of quantity and third-largest sale overall for the American aircraft manufacturer.
The deal was dubbed “historic” by US Vice President Joe Biden, who also spoke by phone with Indian Prime Minister Narendra Modi about it. The call was a part of a flurry of high-level responses as the size of India’s needs created a rare jackpot for the rival plane industry heavyweights in a sector where the victor typically takes all.
By boosting operations and updating its fleet, Air India is attempting to redefine itself. The new aircraft will aid the airline’s owner, Tata Sons, in competing with up-and-coming budget rivals like IndiGo, India’s preeminent airline.
In a videoconference with Tata Sons Chairman Natarajan Chandrasekaran and French President Emmanuel Macron, Modi said that India would soon overtake the United States as the third-largest market in the aviation industry.
According to estimates, India will require more than 2,000 aircraft over the course of the next 15 years. “Today’s historic announcement will help in meeting this growing demand,” he said.
The Boeing order consists of 190 737 Max airplanes, 20 787s, and 10 777Xs. The deal includes customer options for a further 50 737 MAX aircraft and 20 of its 787 models, bringing the total number of aircraft to 290 for a total cost of $45.9 billion at list price.
Chandrasekaran stated during the call that Toulouse, France-based Airbus will give Air India 40 wide-body A350 Airbus aircraft and an additional 210 narrow-body A320neo aircraft.
The deal’s financial details, which might be worth tens of billions of dollars, were not disclosed by Airbus.
Guillaume Faury, CEO of Airbus, who was also present on the call, stated that “this is a historic occasion for India, for Air India, and for Airbus.” The scale of the deal “demonstrates the Indian aviation industry’s hunger for growth. Its growth rate is the highest in the world.
The A350s will be used to “fly all ultra-long distance throughout the world,” according to Chandrasekaran. Short-haul routes mainly employ single-aisle A320 aircraft. To boost its order, the airline has “major alternatives,” according to him.
According to independent aviation expert Bertrand Grabowski, “it is significant for the industry because with the current volatility in the China market, the alternative growing opportunity is India.”
Grabowski, a former banker with vast expertise in international negotiations, said that India is “also sending a strong political signal that it wishes to remain tied to the West at a time when it has appeared uncertain on Russian sanctions.”
Over the past ten years, demand for air travel has skyrocketed in India and other parts of Asia, driven by swiftly expanding economies that have increased incomes and made flying more accessible to millions of people.
Air India has a lot of catching up to accomplish, according to independent aviation researcher Brendan Sobie, who is headquartered in Singapore. According to him, it is in competition with both foreign carriers that are fierce rivals on international routes and newer low-cost airlines that moved quicker to meet demand for domestic services.
Last year, the national carrier’s debt-ridden ownership was reclaimed by Tata Sons, the largest and oldest business in India. When the airline was introduced by the Tata Group in 1932, it was the beginning of commercial aviation in India. In 1953, the government took control of it.
Both Modi and Macron praised the Airbus agreement, praising it as evidence of the growing “strategic relationship” between their nations.
The agreement was hailed as a “new success” and a chance to “explore new areas of collaboration with India” by Macron.
Air India is being integrated by Tata into Vistara, which it operates in partnership with Singapore Airlines, as well as Air Asia India, which it operates in partnership with Malaysian discount airline Air Asia.
