Air India has agreed to buy 250 jets from Airbus AIR.PA, part of a mammoth deal for 470 planes that is also expected to include 220 Boeing BA.N jets, as the airline heralds a decades-long transformation under its new owners, Tata Group.
The Airbus order includes 210 A320neo narrowbody planes and 40 A350 widebody aircraft, which Air India will use to fly "ultra-long routes across the globe," Tata Chairman N Chandrasekaran said on Tuesday.
The combined 470-jet order is the largest by a single airline. Coupled with roughly 25 more Airbus jets that Air India plans to lease to meet its immediate needs, it touches the 500-mark, confirming a scale first reported by Reuters in December.
Analysts said it displays India's ambition to be one of world's biggest aviation markets with its growing base of fliers and large diaspora across the world.
The order also marks a turning point for Air India which, under new CEO Campbell Wilson, is working to revive its reputation as a world-class airline and shake off its image as a tardy, run-down operation with an ageing fleet and poor service.
"One of the most important things is a modern fleet which is efficient and can perform for all routes," Chandrasekaran said during a virtual press briefing.
The online event was attended by Indian Prime Minister Narendra Modi and French President Emmanuel Macron, highlighting the political and economic importance of a deal involving India's former flag bearer.
"This important deal shows, along with the deepening of relations between India and France, the successes and aspirations of the civil aviation sector in India. Today, civil aviation is an integral part of India's growth," Modi said.
Industry sources say India has repeatedly lobbied for Airbus to add a final assembly line in the country, matching a plant in northern China, but the planemaker has rejected the idea on financial and industrial grounds.
However, the aviation deal is expected to have other industrial spin-offs, with Macron pledging France will work with India beyond aircraft.
"This achievement shows that Airbus and all its French partners are fully dedicated to develop new areas of dedication with India," Macron said during the video presentation.
Chandrasekaran said Airbus and Tata were working on bigger partnerships, including an ambition "to bring in commercial aircraft manufacturing at some point in time in the future".
India's growing influence
Air India's order tops American Airlines' AAL.O combined deal for 460 Airbus and Boeing planes more than a decade ago.
Even after significant expected discounts, the deal would be worth tens of billions of dollars at a volatile time for plane giants whose jets are again in demand after the pandemic, but who face mounting industrial and environmental pressures.
"It is important for the industry because given the recent turbulence in the China market, the alternative growth market is India," said independent aviation adviser Bertrand Grabowski.
"India is also sending a strong political signal that it wants to remain attached to the West at a time when it has appeared ambiguous on Russian sanctions," said Grabowski, a former banker with extensive experience of financing international aviation deals.
The deal also includes a major commercial win for engine maker CFM International, a joint venture between General Electric GE.N and France's Safran SAF.PA. It has been selected to power 210 Airbus narrowbody jets ahead of rival Pratt & Whitney RTX.N, while bigger planes will be powered by GE or Britain's Rolls-Royce RR.L.
British Prime Minister Rishi Sunak said the deal between Air India, Airbus and Rolls-Royce would create new jobs.
"By building trade ties with growing economic powers like India we will ensure UK businesses remain at the forefront of global growth and innovation," he said in a statement.
Air India, with its maharajah mascot, was once known for its lavishly decorated planes and stellar service but its reputation declined in the mid-2000s as financial troubles mounted.
The record order aims to put Air India in the league of large global airlines and make it an influential customer for planemakers and suppliers at a time when its home market is seeing a strong post-COVID-19 travel surge.
It reflects a strategy to recapture a solid share of trips between India's diaspora and cities such as Delhi and Mumbai that are currently dominated by foreign rivals such as Emirates.
It will also put Air India on a stronger footing to compete with domestic rival IndiGo, which has a majority share of the Indian market and a strong position in regional flights.
