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Air India Ltd. has signed agreements with Airbus SE and Boeing Co. for what could be the largest purchase of jetliners in commercial aviation history as the carrier seeks to reinvent itself with a fuel-efficient fleet capable of competing with domestic low-cost carriers and powerful Gulf carriers such as Emirates.
According to persons involved with the talks, who requested not to be identified because the negotiations are secret, the airline has agreed on the parameters of the agreement with the two planemakers and may publicly announce the contract as early as next week.
According to the sources, Airbus will get about 250 orders and commitments totaling 210 A320 single-aisle family planes and 40 A350 wide-body aircraft. According to the sources, Boeing has secured around 290 probable acquisitions, including 190 737 Max aircraft and the option for 50 more, as well as 20 787 Dreamliners and the same number as a possible top-up, as well as 10 777X aircraft.
The ultimate total might yet alter due to the deal’s intricate structure, which includes firm orders, memoranda of understanding, and letters of intent, each of which is less firm than an outright purchase agreement, according to the sources.
Airbus, Boeing, and Air India officials all declined to comment.
Air India and its parent company, Tata Group, negotiated the enormous purchase for months, which should allow the carrier to improve service and dependability while decreasing fuel costs. It’s also an attempt by the famous airline, which was founded by Tata in the 1930s, to reclaim traffic from Gulf competitors like Emirates and Qatar Airways, which have created a business model ferrying Indians to the US and Europe via their massive hubs in Dubai and Doha.
China Upswing
Carriers all around the world have been modernising and renewing their fleets in order to capitalise on the quick recovery in travel following the COVID outbreak. Locking in new aircraft commitments has become more important for Air India as the availability of freshly constructed jetliners has grown increasingly limited.
After China unexpectedly discontinued several of its draconian coronavirus restrictions in December and reopened its international borders last month, the travel boom has only accelerated. Airlines are increasing long-haul capacity, tempted by the prospect of the world’s largest outbound tourism market reopening, and anticipating that demand will recover to pre-pandemic levels in 2023.
Last year, Tata purchased Air India in the most high-profile privatisation under Prime Minister Narendra Modi. The agreement brought to an end decades of efforts to unload the loss-making, debt-ridden airline that had survived on years of government subsidies.
Market Consolidation
The firm is integrating its aviation division, which comprises four airline brands, as part of the transaction. Tata said last year that it would merge Air India with Vistara, which it owns in partnership with Singapore Airlines Ltd. Singapore Airlines will own 25.1% of the merged carrier under the terms of the deal.
The agreement is particularly significant for Airbus and Boeing, both of which have joint ventures with India’s largest conglomerate, the Tata Group. Manufacturers have profited from the expansion of low-cost carriers in India, which have placed large orders in recent years. Airbus concluded one of its largest-ever agreements in 2019, selling 300 narrowbody aircraft to Indian budget carrier IndiGo for more than $33 billion at list prices.
While Air India’s recent purchase solidifies Airbus’ advantage in narrowbody aircraft, it also offers the European manufacturer a significant gain in the widebody category, which has traditionally been dominated by Boeing.