Spreading Wings: What Air India's Mega Deals with Airbus And Boeing Mean for The Airline And India

When was the last time you remember hearing about a bulk deal of 470 aircraft being inked by an airline?

History has been scripted by Air India by signing two agreements with Airbus and Boeing. The deals that had been in the works for a while, gained momentum over the summer of last year and solidified further by December.

While the agreements are crucial for the revival of Air India under Tata Sons, they also speak immensely of India’s position on the global map and the relations it shares with France and the United States under Prime Minister Narendra Modi’s leadership.

Air India has signed a letter of intent to buy 250 aircraft from Airbus. These include 140 A320neo,70 A321neo single-aisle planes, 34 A350-1000, and six A350-900 wide-bodies.

The deal is also a welcome boost for Britain’s Rolls-Royce, whose Trent XWB engines will power Airbus’s A350 jets.

Air India is also buying 220 aircraft from Boeing. These include 190 B737 MAX, 20 Boeing 787s, 10 Boeing 777Xs. Air India also has options for an additional fifty 737 MAXs and twenty 787s.

In terms of numbers, the deal with Boeing has been finalised at a list price of $34 billion, which makes this order the third biggest in dollar value.

It is also the second biggest of all time in quantity. What is of utmost importance is how this deal will create about 1 million job opportunities in the United States.

As far as delivery is concerned, in an internal communication Air India has said that six A350-900s will be part of the first delivery at the end of 2023. Following that, 34 A350-1000s will be delivered a couple of years later.

In the words of N Chandra, the head of Tata Sons, they aim to give world-class services but with an Indian heart. And the task hasn’t been easy, because prior to the takeover, Air India’s image was synonymous with rundown operations, shoddy staff, and a far-from-global experience. Before the takeover, the airline was losing 2.6 million a day.

The deals will strengthen Air India’s expansion plans and also help the carrier win back the market share it lost over past years. These orders will synergise Air India’s fleet with Lufthansa and Singapore Airlines. With the entry of wide-body aircraft by Airbus, it is being seen as nothing short of a coup as these planes till now in India had only been supplied by Boeing, which were used by airlines like Vistara and Air India.

The fleet expansion announcement comes after the merger of airlines announced in November last year.

What will be interesting to see will be how Air India uses these deals to increase its passenger traffic. According to the ICAO, the number of air passengers in India rose 2.5 times from 2010 to 167 million in 2019 before the Covid pandemic led to a full stop. In India, apart from IndiGo, other airlines have largely been unprofitable, with Kingfisher going defunct and Jet Airways still waiting to fly again.

The other issue is of India being seen as under-serving. A quick comparison to China will show us where the numbers stand. China currently operates over 200 airports compared to 150 in India. As per the last available data of 2019, the domestic passenger traffic for China stood at 600 million compared to 150 million for India. The international passenger traffic in China stands at 150 million, and it’s 70 million in India.

Read all the Latest India News here