Air India, the flag carrier airline of India, has reportedly signed a huge contract for over 500 new jets worth more than $100 billion at list prices, according to Reuters. This might become the single largest order by any airline as Air India strives to rebuild itself under its new owners, the Tatas.
The 50/50 deal split between Airbus (AIR.PA) of France and Boeing (BA.N) of the United States might be confirmed as soon as next week.
The airline informed their staff that it was
“finalizing a historic order for new aircraft”.
Reuters reports that Boeing’s agreement with Air India was reached on January 27, exactly one year after Tata reclaimed ownership of the once state-run carrier. Airbus and Air India signed their agreement on Friday.
Air India has committed to buying a total of 250 aircraft from Airbus: 210 single-aisle A320neo and 40 widebodies A350; and 220 Boeing 737 MAX narrowbody jets, 20 787 widebodies, and 10 777X superjumbos.
The purchase of 400 narrowbody aircraft will also help Air India gain a larger proportion of regional international traffic and the domestic market, setting up a confrontation with IndiGo and putting it at odds on both fronts.
Air India’s Revamped Strategy
Air India’s objective is to modernise its ageing fleet and re-capture a substantial share of routes between India’s huge overseas immigrant community and cities such as Delhi and Mumbai.
With their new fleet of planes, Gulf rivals like Emirates currently dominate these trips; therefore, the order reflects Air India’s strategy to revamp its ageing fleet.
Though the number of Airbus planes is below what was anticipated (275 planes), the sources did not rule out the possibility of Air India making additional purchases or leasing additional planes in the future.
There was some ambiguity about whether the numbers in the agreement reflected potential adjustments to the final tally that could be made once it received all orders.
Air India, with its maharajah mascot, was formerly famous for its lavishly adorned planes and outstanding service but had its reputation suffer in the mid-2000s as financial difficulties became more severe.
The airline’s new owners have stated that one of their primary goals is to re-establish the company’s status as an illustrious carrier that provides outstanding service and flies aircraft of the highest calibre domestically and internationally.
Air India’s domestic market is seeing a significant post-COVID-19 travel surge; thus, the airlines’ record order for aircraft is in an effort to join the ranks of giant global airlines and become an influential customer for plane makers and suppliers.
Can the maharajah regain its glory with this tall order? Share your valuable comments below.