Air India reveals ‘historic’ orders for 470 Boeing, Airbus aircraft | Business and economy

Air India has announced orders for a total of 470 Boeing and Airbus passenger jets as it races to meet growing demand for affordable air travel among the country’s growing ranks of middle-class consumers.

India’s largest international airline and second largest domestic carrier is buying 220 Boeing jets worth $34 billion and 250 passenger jets from European aircraft manufacturer Airbus.

The Boeing purchase is the third-largest sale of an American aircraft manufacturer of all time, by dollar value, and second all-time by volume.

US President Joe Biden called the deal “historic” and discussed it by phone with Indian Prime Minister Narendra Modi. The call was part of a series of high-level reactions as the scale of India’s needs provided a rare boon for rival aerospace giants in a typically winner-takes-all industry.

Air India is looking to reinvent itself by expanding its operations and modernizing its fleet. The new planes will help the airline’s owner, Tata Sons, compete with upstart discount rivals, including India’s dominant carrier, IndiGo.

“India will be the world’s third largest market in the aviation sector,” Modi said in a video conference with Tata Sons Chairman Natarajan Chandrasekaran and French President Emmanuel Macron.

Over the next 15 years, India is estimated to need more than 2,000 aircraft and “today’s historic announcement will help meet this growing demand,” he said.

Boeing’s order includes 190 737 Max planes, 20 of its 787s and 10 777Xs. The purchase includes the buyer’s options for an additional 50 737 MAXs and 20 of its 787s, which would make 290 aircraft for a total of $45.9 billion at list price.

Toulouse, France-based Airbus will supply Air India with 40 wide-body A350 Airbus aircraft and another 210 narrow-body A320neo aircraft, Chandrasekaran said on 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,” said Airbus Chief Executive Guillaume Faury, who was also on the call. The size of the order “shows the appetite for growth in the Indian aerospace industry. It is the fastest growing in the world”.

Chandrasekaran said the A350 will be used for “all ultra long-haul flights around the world”. Single-aisle A320s are typically used on short-haul routes. He said the airline had “significant opportunities” to increase the order.

“It’s important for the industry because given the recent turbulence in the Chinese market, an alternative growth market is India,” said independent aviation consultant Bertrand Grabowski.

“India is also sending a strong political signal that it wants to remain committed to the West at a time when it seemed ambiguous about sanctions against Russia,” said Grabowski, a former banker with extensive experience in international affairs.

Demand for air travel in India and elsewhere in Asia has boomed over the past decade, fueled by fast-growing economies that have boosted incomes and made travel more affordable for millions of people.

“There’s a lot of catching up to do” for Air India, said Brendan Sobie, an independent aviation analyst based in Singapore. It competes with newer low-cost airlines that have been quicker to meet demand for domestic services, as well as foreign carriers that are major competitors on international routes, he added.

Tata Sons, India’s oldest and largest conglomerate, regained ownership of the debt-ridden national carrier last year. The Tata Group pioneered commercial aviation in India when it launched the airline in 1932. The government took it over in 1953.

Modi and Macron welcomed the deal with Airbus, and both said it was a sign of a 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 integrates Air India with Vistara, which it runs jointly with Singapore Airlines, and Air Asia India, which it runs with Malaysian discounter Air Asia.

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