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Thu, Feb 02, 2023

Air India to Acquire Upwards of 495 New Airliners

Massive Deals with Boeing and Airbus Pending

In October 2022, India’s national air-carrier, Air India, was acquired by the Tata Group—a Mumbai-based Indian multinational conglomerate comprising 29 discrete, publicly-listed companies with a combined market capitalization of $311-billion.

On 27 January 2023, for purpose of furthering the Tata Group’s aspiration to restore the airline’s reputation in India and overseas, Air India moved to finalize an agreement that would see its fleet revitalized with up to 495 new airliners.

The hard-won deal—hammered out over months of closely-guarded, hard-nosed negotiations—is reportedly set to commence with an initial order for 190 Boeing 737 MAX narrow-body jets, twenty wide-body 787 Dreamliners, and ten wide-body 777Xs.

To curry favor with the E.U. and engender a sense of reciprocity among European air travelers, Air India will complement its veritable boon of Boeing aircraft with a major acquisition of Airbus jets. The air-carrier is reportedly negotiating an agreement by which it will procure some 235 Airbus single-aisle jets and approximately forty A350 widebody airplanes.

Notwithstanding initial expectations that Air India’s Boeing and Airbus deals would be made public in a single coordinated announcement, it remains unclear when and how subject news will be disseminated. Airline industry pundits portend a statement announcing the joint acquisition will be made during February’s Aero India air show.

The reticence with which Air India has fielded inquiries pertaining to its fleet expansion is belied by a Friday, 27 January 2023 note to employees in which the airline asserted it was “finalizing an historic order of new aircraft to power future growth.”

By dint of the immense, if not wholly definitive, aircraft order, Air India seeks to establish itself among major global airlines, the needs of which influence plane-makers and aerospace suppliers.

Currently, India’s large but under-served domestic air-travel market is dominated by budget carrier IndiGo. Conversely, the majority of India’s international air-travel market is served by Middle Eastern carriers the likes of Emirates and Qatar Airways.  

Air India aspires to corner thirty-percent of the Indian domestic air-travel market in the next five years, thereby narrowing the gap with market leader IndiGo. Air India seeks, also, to increase by “multiples” its share of Indian international travel.

To actualize its aims, Air India has pledged to spend in excess of $400-million to refurbish the entirety of its legacy wide-body fleet of 27 Boeing 787-8 and 13 777 aircraft. In recent months, the airline has returned to service nearly twenty aircraft formerly grounded for want of parts and money.

In addition to Air India, the Tata Group’s airline portfolio includes scheduled low-cost carriers AirAsia India and Air India Express; Vistara, a full-service Indian airline and joint venture of Tata Sons and Singapore Airlines; and Taj Air, a Mumbai-based, non-scheduled, charter air-carrier.

Analysts posit Air India will win passengers from rival Middle Eastern carriers, but not before the modernity of the latter’s fleet and the quality of its service equals the surpassing standard for which world-class airlines are renowned. That the Tata Group is wholly committed to fostering Air India’s preeminence is abundantly evident, and quantifiable in billions of dollars.

FMI: www.airindia.in

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