Air India Seals Record $80 Billion Deal In Indian Aviation History

A new chapter in Indian Aviation

Indian aviation is experiencing unprecedented activity, which many experts say will prove to be a watershed moment for the industry, airlines, crew, passengers, linked services, and the nation as a sunny market for the sector.

In order to grow its fleet and operations, India’s flag airline Air India has announced the purchase of 470 passenger planes from global conglomerates Airbus and Boeing for passengers booking cheap international flight tickets. The order, which includes 210 A320/321 Neo/XLRs, 40 A350-900/1000s, 190 737-Max, 20 787s, and 10 777s, is regarded as one of the largest placed by any airline in world aviation history. That is the largest order in aviation history, and it has been placed by none other than Air India!

You must have seen this news by now! After all, it’s all over the place!!

Even UK Prime Minister Rishi Sunak mentioned it on LinkedIn.

Deciphering the Air India Deal

Air India is intending on procuring 470 aircraft from Airbus (250) and Boeing (220). (220). Why not order from just one business-like IndiGo? The varied planes would need distinct maintenance staff, different equipment, and whatnot. Wouldn’t order from the same firm be better? Nah, since Air India requires a lot more planes. It has not only ordered 470 aircraft but also has the possibility to purchase 370 more! So, there’s no way one firm would be able to execute all of these requests in time.

Hence, it makes sense to order from both firms to save time.

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Why does Air India suddenly require so many planes?

Here’s why Air India may place such a large order:

When you place a big order, you get priority. Airbus and Boeing will both work hard and quickly to keep Air India satisfied. Air India aspires to dominate the world skies. To do this, it must have an excellent fleet. It now has just 220 aircraft in its fleet.

Is it necessary for India to have so many planes?

IndiGo, India’s largest airline by market share and fleet size, has only 300 aircraft! So, what does Air India intend to do with its 470 new planes?

The Strategy of Air India

Since regaining control of Air India, Tata has had one goal in mind: to ensure that Air India once again commands the sky. This requires low-cost carriers. Nevertheless, its low-cost carriers, Air India Express, and Air Asia have just 52 aircraft at the moment. As a result, more low-cost airplanes are required. Nevertheless, Air India will only purchase 190 low-cost 737 MAX planes.

What about the other planes?

Air India, you see, is now going global with its ambition: it wants to conquer the international sky. Its competitors are no longer limited to IndiGo and SpiceJet.

It currently competes with international carriers such as Qatar Airlines, Emirates, and Etihad.

Air India’s primary concentration at the moment is on the India-US and India-Europe routes.

If it is successful in acquiring market share in international flight sectors, the implications for India might be enormous!

Residents from South East Asian nations may now go to India to catch flights to Europe or the United States, similar to how many Indians presently fly to Dubai or Doha to catch flights to Europe and the United States.

This would benefit both Indian tourists and the Indian economy. Also, India requires additional flights. According to a YouGov poll, 78% of respondents intend to travel this year!

And we’ve already begun to put this goal into action.

We will have spent $1.5 billion on international travel by August 2022.

This figure is more than twice the $784 million we spent in August of this year!! During the next two decades, we will require 2,210 airplanes to suit our travel demands!

So, does Air India’s move make sense? It is buying planes immediately in order to capitalize on the increased demand as quickly as feasible.

Air India may be flipping the IndiGo aircraft leasing strategy on its head. Many airlines, you see, no longer purchase planes. They are leased. This reduces a significant amount of cash leakage and assists airlines in becoming profitable. But, Air India is an exception. It may borrow and acquire planes at a considerably lesser cost than leasing them since it has the backing of Tata Sons, which has high creditworthiness (lease rentals are already climbing quickly!). Here comes the most exciting part.

Why are the United States, the United Kingdom, and France celebrating?

One Agreement to Promote All Economies

Air India boosted their economies just before a catastrophic recession with this one transaction. Building that many planes will need a lot of hand labor. This will generate employment in France, the United Kingdom, and the United States, where Airbus produces airplanes. Biden claims that the agreement would produce 1 million jobs in 44 states! This agreement may also boost India’s connections with other countries. Furthermore, this might persuade Boeing and Airbus to establish plane assembly plants in India. This would promote jobs in India and our economy.

It’s amazing how one transaction can affect so many people’s lives, isn’t it?

Would this contract, however, help Air India become India’s favorite airline? Will it be able to defeat IndiGo? Time will tell…

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