Air India bosses were expected to sign the first ‘half’ of a huge order for 495 jets with Boeing and major engine suppliers on Friday (January 27).
Industry sources said that Air India – taken over by the Tata Group a year ago – would place an order for 220 new aircraft (190 737 Max narrow-body jets, plus 20 787s and 10 777X), after months of tough negotiations.
Tata is seeking to revive the former state-run carrier and wants new planes to help it compete with larger rivals. Today’s reported deal includes engines made by General Electric and CFM International, the two sources said.
The second half of the order, which industry sources said includes about 235 Airbus single-aisle jets and about 40 Airbus A350 wide-body aircraft, is expected to be formally wrapped up over coming days.
Senior Boeing officials, including Stanley Deal, chief executive of Boeing Commercial Airplanes, along with GE and CFM executives are expected in India to mark the deal on Friday.
Under-served air travel market
Despite earlier expectations of a single coordinated announcement, it remains unclear when either deal may be publicly disclosed, especially with the Aero India air show looming in February when deals like this are usually revealed.
Manufacturers Boeing and Airbus, as well as CFM’s joint venture partners GE and Safran declined to comment.
Air India did not respond to a request for comment but in a note to employees on Friday, marking its first anniversary under Tata’s ownership, the airline said it is “finalising a historic order of new aircraft to power future growth”.
The order, once finalised, aims to put Air India in the league of large global airlines and make it an influential customer for plane-makers and suppliers at a time when its home market is seeing a strong post-Covid travel surge.
Domestic passenger air traffic in India grew 47% in 2022 from a year earlier, government data showed.
Analysts caution the airline faces intense competition given the connectivity carved out by domestic and international rivals.
India, which is set to overtake China as the world’s most populous country, has a large, under-served air travel market dominated by budget carrier IndiGo. The bulk of India’s outbound passenger traffic, however, is carried by Middle Eastern airlines like Emirates and Qatar Airways.
Bid to match Gulf carriers’ quality
Under its new owners, Air India is looking to restore its reputation at home and abroad as a storied carrier with impeccable service and world-class planes.
It has put back in service nearly 20 aircraft that had been grounded for years due to lack of parts and money. The airline has also said it will spend more than $400 million to refurbish its entire legacy wide body fleet of 27 Boeing 787-8s and 13 777 aircraft.
The aim is to corner 30% of the domestic market over the next five years thus narrowing the gap with market leader IndiGo. It also wants to increase by “multiples” its share of international travel, the airline’s chief executive, Campbell Wilson, has said.
Tata’s four airlines, including two budget carriers, Air India and Vistara, its joint venture with Singapore Airlines, have a combined market share of 24%.
Analysts have said Air India has the ability to claw back some passengers from rival Gulf carriers but not before it matches their quality of fleet and service. Nor will the domestic battle with IndiGo happen without tough competition from a carrier that continues to expand.
- Reuters with addtional editing by Jim Pollard