Air India's massive deal with Airbus and Boeing is a significant step for the airline to reinvent itself, take on local and international competitors, and upgrade service and reliability. The deal is also a win for Airbus and Boeing, who will benefit from their local ventures with Tata Group.
Air India, the Indian flag carrier, is nearing completion of what could become the largest purchase of jetliners in commercial aviation history, as the airline seeks to reinvent itself to take on local low-cost rivals and powerful Gulf airlines like Emirates.
The airline has signed agreements with Airbus and Boeing for around 500 passenger jets, with Airbus set to win about 250 orders and commitments and Boeing to secure about 290 possible purchases.
The deal is a combination of firm orders, memoranda of understanding and letters of intent, and the final tally could still change. The negotiations have been carried out over the past few months by Air India and its parent company, Tata Group, and the deal should allow the carrier to upgrade service, reliability and reduce fuel costs.
Tata bought Air India last year in the most high-profile privatisation under Prime Minister Narendra Modi.
As part of the purchase, the group is consolidating its aviation business, which includes four airline brands, and has said it would merge Air India with Vistara, which it jointly holds with Singapore Airlines (SIA).
That agreement will give SIA a 25.1% stake in the combined carrier. The plane deal is also a big win for Airbus and Boeing, both of which have local ventures with the Tata Group, India's largest conglomerate.
The global aviation industry has been upgrading and refreshing their fleets to capitalize on the rapid rebound in travel after the Covid
pandemic, and this is also the case for Air India as the supply of newly built jetliners became increasingly constrained.
With China abruptly ending many of its harsh coronavirus
measures and throwing open its international borders, airlines are ramping up their long-haul capacity, enticed by the prospect of the world's biggest outbound tourism market being open for business again and betting that demand more broadly will return to pre-pandemic levels in 2023.