Air India set to purchase 470 aircraft from Boeing and Airbus in one of the largest aviation orders in history, as the country’s air passenger market rebounds from the depths of the Covid-19 pandemic. The carrier plans to purchase 40 wide-body A350 jets, as well as 140 A320neo and 70 A321neo single-aisle aircraft from Airbus. From rival Boeing, it said it would acquire 190 of the narrow-body 737 Max Airliners, 20 twin-aisle 787s and 10 777Xs, with the option to purchase another 70 Aircraft.
The deal is part of an overhaul by owner Tata Sons of the recently privatised carrier and eclipses previous records for a single airline. Airbus did not disclose the financial terms of the deal. The list price for the planes from Boeing totals $34bn, although airlines typically receive discounts as high as 50%. Still, the price tag makes it the third-largest sale in the US company’s history.
Tata Sons chair Natarajan Chandrasekaran announced the Airbus purchase on Tuesday at a virtual event attended by India’s prime minister Narendra Modi, French President Emmanuel Macron and Tata patriarch Ratan Tata. The family conglomerate bought Air India from the government last year, returning the airline to its original owners. The airline had been nationalised in 1953. Tata has promised to modernise the once glamorous carrier, whose reputation frayed as its finances deteriorated.
“Air India is not yet another project,” said Mr Chandrasekaran, adding that it was akin to a “national” project. “A lot of emotions are involved in this project, there are huge expectations.” He said Air India had options to “increase the fleet size” as the carrier grew, and the company is expected to announce it is buying more planes from Boeing.
Airbus chief executive Guillaume Faury hailed the deal as “historic”, and said the A350 and A320neo planes had been chosen “to script Air India’s revival. The time is right for India to become an international hub,” he added.
Christian Scherer, Airbus' chief commercial officer, said it would be the “first time that A350 aircraft would be flying in India’s skies”. The jets would “unlock the pent-up potential of India’s long-haul market”, with the country “on the verge of an international air travel revolution”.
The deal is also a welcome boost for Britain’s Rolls-Royce, whose Trent XWB engines power Airbus’s A350 jets. It will also create 450 manufacturing jobs in the UK, where Airbus designs and builds the wings for all of its commercial aircraft.
Boeing predicted that within the next decade, India will become the third-largest market for air travel, behind the US and China. It expects regional traffic will grow at 7% annually through 2041, nearly double the world average. Today’s order leaves Air India “well positioned to achieve its expansion plans”, said Stan Deal, chief executive of Boeing’s commercial jet business.
The aircraft will be delivered over the course of several years. Both Boeing and Airbus have struggled to deliver planes to customers amid persistent supply chain issues since the peak of the pandemic.
Airbus’s Scherer said the company would deliver the first of the six A350-900s at the end of 2023. The 34 A350-1000s will be delivered a couple of years later, while the 210 single-aisle aircraft will be handed over “from the tail-end of the decade” given supply chain constraints.
Several other carriers have placed big orders recently, betting they can capture market share if they have the planes to offer more flights. United Airlines has ordered 370 737 Max jets, plus another 100 787s. Airbus also sold nearly 300 aircraft to four Chinese carriers last year, including 96 A320neos to China Southern Airlines, a traditional Boeing customer.
India’s domestic carriers have long struggled to compete with powerful government-backed Gulf airlines, as well as south-eastern aviation hubs such as Singapore. Some analysts believe that Air India’s new expansion will help India catch up. “For lack of a growing carrier expanding its fleet, India has been dominated for far too long by Gulf and south-east Asian carriers,” said Jitender Bhargava, a former Air India executive director.
