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Boeing Wins $7 Billion Contract in India

India's state-run airline has decided to buy 50 new Boeing jetliners in a deal worth nearly $7 billion. Both U.S.-based Boeing and its European rival, Airbus, had been vying for the massive contract.

State-run Air India says the new jets from Boeing will include eight long-haul jetliners, 15 medium-range aircraft and 27 of the company's newest model, the "Dreamliner," which has yet to be produced.

The jets will be delivered over a 10-year period starting in 2006.

Senior Boeing officials in India called the contract "a major win", and hoped it would influence future decisions by private airlines that are expanding their fleets.

India's biggest aviation deal was clinched after a year of high-profile lobbying by Boeing and Airbus executives, as well as senior government officials from the United States and Europe.

Aviation analysts say both manufacturers had offered competitive bids, and it was probably politics that tilted the scales in favor of Boeing.

Kapil Kaul of the Center for Asia-Pacific Aviation in New Delhi says "geo-political considerations" are always factored into such large deals.

"Indo-American relationship is moving on a different platform…India and U.S. are getting closer, and I think this order is perhaps a byproduct of the stronger relationship between these two countries," he said.

India's booming economy is spurring demand for air travel and both state-run and private airlines plan to purchase hundreds of new jets over the next five years. New budget airlines are starting operations.

India's first international budget airline, Air-India Express, made its maiden flight on Friday from Trivandrum in southern India to the United Arab Emirates.

The airline, an arm of government-run Air India, is starting operations with three mid-sized Boeing 737-800s, and plans to operate 40 flights a week from five Indian cities.

The country's first budget airline, Air Deccan, began operations two years ago, and two more budget carriers are due to start flying later this month.

Mr. Kaul says the coming years will see fierce competition between Airbus and Boeing for this growing market.

"There is a compelling reason for investors, manufacturers, and suppliers to be here. Our estimate is that in another five years, we will add another 300 aircraft approximately, the investment in fleet plans over the next five years would be $15 billion," Mr. Kaul said.

Last year, another state-run airline, Indian Airlines, decided to buy 42 planes from Airbus.