Feb 17, 2023: Air India Ltd. has signed deals with Airbus SE and Boeing Co. for what may end up being the largest purchase of aircraft in commercial aviation history. Read the know more!
President Joe Biden of the United States, President Emmanuel Macron of France, and Prime Minister Rishi Sunak of the United Kingdom have all praised Air India for choosing to purchase aircraft from Airbus and Boeing. In order to purchase a mixture of widebody and single-aisle aircraft, the Indian airline has signed letters of intent with Airbus and Boeing. The agreement was revealed during a video conference between French President Emmanuel Macron and Indian Prime Minister Narendra Modi. US President Joe Biden and UK Prime Minister Rishi Sunak also expressed support for the agreement.
In an effort to rebuild itself with a fleet that can compete with regional low-cost rivals and strong Gulf airlines like Emirates, Air India Ltd. has signed deals with Airbus SE and Boeing Co. for what may end up being the largest purchase of aircraft in commercial aviation history.
To expand its local and international operations, Air India, a company controlled by the Tata Group, has committed to ordering 250 Airbus aircraft. The commitment includes 34 A350-1000 and six A350-900 wide-body jets, as well as 140 A320neo and 70 A321neo single-aisle aircraft. The all-new, long-range aircraft will usher in a new era for the nation when it makes its debut in the Indian market.
The order intends to upgrade and increase the airline's fleet in order to become a more expansive, full-service carrier that can meet the region's rising travel demand. By the end of 2023, the first A350-900 is expected to be delivered.
In the 300-410 seater category, the A350 wide-body aircraft leads the world in efficiency and modernity. Modern technologies and aerodynamics are integrated into the A350's brand-new design to give unrivalled levels of comfort and efficiency. Its new generation engines and use of lightweight materials provide it a 25% advantage over competitor aircraft of a previous generation in terms of fuel burn, operating expenses, and carbon dioxide (CO2) emissions.
The deal's complex structure, which consists of firm orders, mutual agreements, and letters of intent—both of which are less binding than an outright purchase agreement—could lead the final number to vary, according to the sources.
Firm order - A firm order in the business world is one that cannot be revoked, amended, or canceled. In other words, a firm order is a confirmed order.
Mutual agreement(Memorandum of understanding) - a formal agreement that indicates plans for a common line of action or plan that shares mutual interest between two or more parties.
Letter of intent - a document that, before a legal agreement is finalised, outlines the broad plans of an agreement between two or more parties.
The significant deal, which Air India and its parent company, Tata Group, spent months negotiating, should enable the airline to improve service and dependability while reducing fuel costs. Additionally, it's an effort by the prestigious airline, which was established in the 1930s by Tata, to reclaim customers from rival Gulf carriers like Emirates or Qatar Airways, which have developed a business model around transporting Indians to the US and Europe via their massive hubs in Dubai and Doha.
To take advantage of the quick recovery in travel following the Covid outbreak, carriers all over the world have been updating and renewing their fleets. As the availability of recently constructed passenger jets became more limited, Air India felt a pressing need to secure new aircraft contracts.
The increase in travel has only accelerated after China suddenly removed many of its strict coronavirus restrictions in December and opened its international borders last month. The possibility of the world's largest international tourism market reopening for business and the belief that demand would generally recover to pre-pandemic levels in 2023 are attracting airlines to increase their capacity in the long run.
Airbus and Boeing, who both have local partnerships with the Tata Group, India's largest company, benefit greatly from the agreement as well. The expansion of low-cost carriers in India, which had made large orders in previous years, has been advantageous for the manufacturers. With the sale of 300 narrowbody aircraft to Indian budget airline IndiGo in 2019, Airbus closed one of its largest-ever agreements. The aircraft were valued at more than INR 2,72,317 crore at retail prices.
Air India's most recent order not only solidifies Airbus's dominance in narrow-body aircraft but also offers the European company a significant victory in the previously Boeing-dominated wide-body market.