Tata Group-owned Air India on Tuesday announced its intent to buy 470 aircraft from Boeing and Airbus in a deal seen as the biggest one in modern aviation history. However, more than that, the deal signals a significant take-off of the Indian flag carrier’s dream of dominating the global skies.
An affirmation of the bullishness in India’s aviation industry, the deal is expected to further cater to India’s expansive flier base and a vast diaspora globally, which is currently dominated by foreign rivals such as Emirates and other Gulf carriers.
A record deal has been signed for obtaining 220 planes from US-based Boeing and 250 from European manufacturer Airbus. This order tops the record previously set by American Airlines‘ combined deal for 460 Airbus and Boeing planes more than a decade ago.
Airbus no longer publishes list prices, while Boeing claimed the order was valued at $34 billion at the list price, as per reports.
A geopolitical tour de force
“The time is right for India to turn into an international hub,” Guillaume Faury, the Airbus chief executive officer said in a briefing with Prime Minister Narendra Modi. “India is well on its way.”
On the official announcement of the deal, leaders and representatives of the US and France were quick to hail it.
US President Joe Biden called the agreement ‘historic’ and discussed it in a call with Modi – part of a flurry of high-level reactions. French President Emmanuel Macron said the deal shows that Airbus and all its French partners are fully dedicated to developing new areas of dedication with India.
It is important to note that Airbus and Boeing are the only two dominant players engaged in commercial airline manufacturing.
Air India’s mega deal is part of a push to expand India’s aviation industry, PM Modi said at a briefing.
India, the world’s fastest-growing aviation market, needs a stronger service network. Boeing estimates the Indian commercial fleet could nearly quadruple by 2041 from 2019. In addition, the south Asian country wants to be a hub for maintenance and repair operations for the region.
Boeing, at the Aero India show in Bengaluru, announced that it will invest $24 million (Rs 200 crore) in a logistics park and separately set up a support center for airlines near New Delhi.
Air India’s deal with Airbus is expected to have industrial spin-offs, with Macron pledging cooperation in other sectors.
Tata Sons Chairman N Chandrasekaran said Airbus and Tata were working on bigger partnerships, including an ambition “to bring in commercial aircraft manufacturing at some point in time in the future”.
Industry sources told news agency Reuters that India has repeatedly lobbied for Airbus to add a final assembly line in the country, matching a plant in northern China, but that the planemaker has so far rejected the idea on financial and industrial grounds.
Destination: Global dominance
Air India, erstwhile under government ownership, is now attempting to win back traffic from Emirates and Qatar Airways, which have built a business model ferrying Indians to the US and Europe via their huge hubs in Dubai and Doha.
With the culmination of its latest transaction, Air India’s fleet would see the addition of fuel-efficient planes which will help it position itself higher in the international market. It can also take on IndiGo in the domestic market, where it currently lags.
The fleet expansion plans come after Tata Group in November announced a merger of all its airlines, including full-service carriers Air India and Vistara, and budget airlines Air India Express and AirAsia India.
The combined entity has a current fleet of 220 aircraft, cementing Air India’s position as the country’s largest international carrier and second largest in the domestic market.
New CEO Campbell Wilson has stressed on reviving Air India’s reputation as a world-class airline and shaking off its image as one with an aging fleet, and poor service.
With rising troubles since the turn of the century, Air India could no longer keep up with its reputation of lavishly decorated planes and stellar service.
The record order aims to put Air India in the league of large global airlines and make it an influential customer for plane makers and suppliers at a time when its home market is seeing a strong post-COVID-19 travel surge.
(With agency inputs)