Air India places largest aircraft order in history

UPDATE DAY

Air India on Tuesday placed the largest order in the history of global commercial aviation, asking Airbus and Boeing to supply it with 400 medium-haul and 70 long-haul jets to meet growth expected from the huge Indian market.

The Indian flag carrier, privatized last year, has signed a letter of intent with Airbus for 210 A320neo family planes (140 A320s and 70 A321s) and 40 A350 wide-bodied jets to Airbus. It has also placed a firm order for 190 Boeing 737 MAX, 20 long-haul B787 and 10 B777X to its American rival, ensuring several months of production for each, according to a US government source.

The amount of the transaction has not been disclosed, but the latest catalog prices published by the two manufacturers, never applied because of the discounts granted, value it at more than 70 billion dollars.

So far, the record order was placed in 2011 when American Airlines signed a total of 460 Airbus A320s and Boeing 737s with the two aircraft manufacturers.

Negotiated for almost two years with Airbus, the order intention must be “finalized in the coming weeks”, according to the commercial director of the aircraft manufacturer Christian Scherer. It also includes a 'significant number of options' for additional A320s as Air India grows to become 'a world-class airline', according to N. Chandrasekaran, the boss of Air India's Tata Group. .

For Boeing, the order comes with options for 50 737 MAX and 20 additional B787s. It “reflects the strength of the economic partnership between the United States and India,” US President Joe Biden said in a statement.

During a telephone conversation on Tuesday, Narendra Modi and Joe Biden also “expressed their strong desire to strengthen bilateral cooperation in the fields of space, semiconductors, supply chains, co-production and defense co-development and knowledge and innovation ecosystems,” according to the Indian Prime Minister’s Office.

Narendra Modi and French President Emmanuel Macron, who both attended the signing ceremony with Airbus by videoconference, for their part presented this agreement as part of the strategic partnership forged between the two countries.

“There is a deep commitment in France to provide the most efficient technologies available to India and to be part of your 'Made in India' strategy”, insisted the French president.

This monster order marks a win-back operation for Air India, which currently operates a fleet of 115 aircraft and hadn't purchased new planes since 2006.

Nationalized in 1953, the company had been supported by successive Indian governments which had injected 15 billion dollars until 2009 without preventing its decline in the face of the explosion of low-cost companies in the subcontinent. The government ended up selling Air India to Tata, a tea and steel conglomerate, for $2.4 billion.

Since taking control in January 2022, Tata has intended to renew the fleet of the national carrier to meet the expected growth of the Indian market and capture part of the long-haul traffic at the expense of the Gulf companies. These provide the link between the large Indian diaspora and their country of origin.

His boss Campbell Wilson is aiming for a 30% market share in the Indian domestic market over the next five years and intends to open more international routes.

India is the world's third largest air transport market and, according to Airbus forecasts, its air traffic is expected to grow at an average annual rate of 6.6% over the next two decades, a rate almost twice the global average.

The Indian market is expected to quadruple by 2041 to reach 641 million people, according to forecasts by the European aircraft manufacturer. Indian companies are expected to order between 1,500 and 1,700 new aircraft over the next two years, according to a recent analysis note from the Center for Aviation (CAPA).

For Airbus, this order reinforces the success of its star single-aisle aircraft with Indian companies and allows it to gain a foothold in the Indian market with the A350. “It is a great satisfaction, Airbus did not have a jumbo jet operating under the Indian flag”, observed Christian Scherer.

This order is also a satisfaction for the Seattle giant, little presence on the latest-generation single-aisle aircraft market in India.

The two aircraft manufacturers have weathered the pandemic in terms of increasing orders, but they are both struggling to ramp up production in the face of difficulties suppliers to follow them in order to meet their large order book.

“Our only regret is not having more availability sooner”, according to the commercial director of Airbus: first deliveries of the A320s will begin in 2027. The first six A350s, whose delivery to Aeroflot was canceled due to sanctions affecting Russia, will finally be delivered to Air India at the end of 2023 and the others from 2025. The expected dates of the deliveries of the Boeings were not specified in the immediate.