Air India has announced orders for a total of 470 Boeing and Airbus passenger jets as it races to tap surging demand for affordable air travel from the nation’s growing ranks of middle-class consumers.
India’s largest international airline and second-largest domestic carrier is buying 220 Boeing aircraft valued at $34bn and 250 passenger jets from European plane manufacturer Airbus.
The Boeing purchase is the United States plane maker’s third-largest sale of all time, in dollar value, and its second of all time in quantity.
US President Joe Biden called the agreement “historic” and discussed it by telephone with Indian Prime Minister Narendra Modi. The call was part of a flurry of high-level reactions as the scale of India’s needs provided a rare bonanza for the competing plane giants in an industry where the winner usually takes all.
Air India is seeking to reinvent itself by expanding its operations and modernising its fleet. The new jets will help the airline’s owner, Tata Sons, compete against upstart discount rivals including India’s dominant carrier, IndiGo.
“India is going to be the world’s third-largest market in the aviation sector,” Modi said in a videoconference with Tata Sons Chairman Natarajan Chandrasekaran and French President Emmanuel Macron.
Over the next 15 years, it is estimated India will need more than 2,000 aircraft and “today’s historic announcement will help in meeting this growing demand”, he said.
The Boeing order includes 190 737 Max aircraft, 20 of its 787s and 10 of its 777Xs. The purchase includes customer options for an additional 50 737 MAXs and 20 of its 787s, which would make it 290 aeroplanes for a total of $45.9bn at list price.
Toulouse, France-based Airbus will provide Air India with 40 wide-body A350 Airbus aircraft and another 210 narrow-body A320neo planes, Chandrasekaran said in the call.
Airbus did not disclose the financial terms of the deal, which could be worth tens of billions of dollars.
“Today is a historic moment for India, for Air India and for Airbus,” Airbus CEO Guillaume Faury, who was also on the call, said. The size of the order “demonstrates the appetite for growth in the Indian aviation industry. It’s the fastest growing in the world”.
Chandrasekaran said the A350s will be used to “fly all ultra-long distance across the globe”. Single-aisle A320s are typically used on short-haul routes. He said the airline has “significant options” to increase its order.
“It is important for the industry because given the recent turbulence in the China market, the alternative growth market is India,” said independent aviation adviser Bertrand Grabowski.
“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,” said Grabowski, a former banker with extensive experience in international deals.
Demand for air travel in India and elsewhere in Asia has boomed over the past decade, fuelled by fast-growing economies that have raised incomes and made travel more affordable for millions of people.
“There’s a lot of catch-up to do” for Air India, said Brendan Sobie, a Singapore-based independent aviation analyst. It is competing with newer budget airlines that moved faster to tap demand on domestic services as well as foreign carriers that are formidable competitors on international routes, he added.
Tata Sons, India’s oldest and largest conglomerate, regained ownership of the debt-laden national carrier last year. The Tata Group pioneered commercial aviation in India when it launched the airline in 1932. It was taken over by the government in 1953.
Modi and Macron applauded the Airbus deal, with both saying it is a sign of the strengthening “strategic partnership” between their countries.
Macron called the deal a “new success” and an opportunity to “develop new areas of cooperation with India”.
Tata is integrating Air India with Vistara, which it jointly runs with Singapore Airlines, and with Air Asia India, which it runs with Malaysian discount operator Air Asia. (Aljazeera)