As it tries to meet the growing demand from the country’s middle-class consumers for low-cost air travel, Air India has placed orders for 470 Boeing and Airbus passenger jets.
India’s largest international airline and second-largest domestic carrier are purchasing 250 passenger jets from Airbus and 220 Boeing aircraft worth $34 billion.
The United States aircraft manufacturer’s purchase of Boeing ranks second in terms of quantity and third in terms of dollar value.
The agreement was discussed over the phone by US President Joe Biden and Indian Prime Minister Narendra Modi, who referred to it as “historic.” As the scope of India’s requirements provided a rare opportunity for the competing plane giants in an industry where the winner typically takes all, the call was one of a flurry of high-level responses.
By modernizing its fleet and expanding its operations, Air India is attempting to reinvent itself. The airline’s owner, Tata Sons, will be able to better compete with new discount rivals like IndiGo, India’s leading airline.
During a videoconference with Tata Sons Chairman Natarajan Chandrasekaran and French President Emmanuel Macron, Modi stated, “India is going to be the world’s third-largest market in the aviation sector.”
He stated that “today’s historic announcement will help in meeting this growing demand” and that it is anticipated that India will require more than 2,000 aircraft over the course of the next 15 years.
190 737 Max, 20 787, and 10 777X aircraft from Boeing are included in the order. The purchase includes customer options for an additional 50 737 MAXs and 20 787s, totaling 290 aircraft at a list price of $45.9bn.
Chandrasekaran stated in the call that Airbus, which is based in Toulouse, France, will provide Air India with 40 wide-body A350 Airbus aircraft and another 210 narrow-body A320neo planes.
The deal’s financial terms, which could be worth tens of billions of dollars, were not made public by Airbus.
According to Airbus CEO Guillaume Faury, who was also on the call, “Today is a historic moment for India, for Air India and for Airbus.” The size of the order “demonstrates the Indian aviation industry’s appetite for expansion.” It is the world’s fastest-growing.
The A350s will be used to “fly all ultra-long distance across the globe,” according to Chandrasekaran. Short-haul routes typically make use of A320s with a single aisle. He stated that the airline can increase its order through “significant options.”
Bertrand Grabowski, an independent aviation advisor, stated, “It is important for the industry because given the recent turbulence in the China market, the alternative growth market is India.”
Grabowski, a former banker with extensive experience in international transactions, stated, “India is also sending a strong political signal that it wants to remain attached to the West at a time when it has appeared ambiguous on Russian sanctions.”
Over the past decade, there has been a boom in demand for air travel in India and other parts of Asia. This is because of rapidly expanding economies that have raised incomes and made travel more affordable for millions of people.
An independent aviation analyst based in Singapore, Brendan Sobie, stated, “There is a lot of catch-up to do” for Air India. He added that it is competing with foreign carriers that are formidable competitors on international routes as well as younger, budget airlines that moved more quickly to meet demand for domestic services.
Last year, India’s oldest and largest conglomerate, Tata Sons, regained ownership of the national airline that was burdened with debt. In 1932, the Tata Group established the first commercial airline in India. In 1953, the government took control of it.
Both Modi and Macron praised the Airbus deal, describing it as evidence of the growing “strategic partnership” between their respective nations.
Macron described the agreement as an opportunity to “develop new areas of cooperation with India” and a “new success.”
Tata is merging Air India with Vistara, which it operates alongside Singapore Airlines, and Air Asia India, which it operates alongside Malaysian discount airline Air Asia.