(Reuters) – Air India has agreed to buy 250 jets from Airbus (AIR.PA), part of a mammoth deal for 470 planes, as the carrier heralds a decades-long transformation under its new owners, Tata Group.
The order includes 210 narrowbody planes and 40 widebody aircraft, which Air India will use to “fly ultra-long routes across the globe”, Tata Chairman N Chandrasekaran said on Tuesday.
The deal is expected to also include an order for 220 planes from Airbus rival Boeing (BA.N), Reuters reported. “We are committed to building a world class airline … 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, signalling 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 continues to reject 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”.
“We see this moment as the most significant moment for the Tata Group’s Air India, Indian aviation and the manufacturing sector in India,” he said.
The deal will mark a turning point for Air India which, under new chief executive Campbell Wilson, is working to revive its reputation as a world-class airline and shake off its image of being a tardy, run-down operation with an ageing fleet and poor service.
Air India’s order is expected to top American Airlines’ (AAL.O) combined deal for 460 Airbus and Boeing planes more than a decade ago – making it the single largest deal by an airline.
Reuters in December reported that Air India was in negotiations for a deal close to 500 planes.
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 politically sensitive international aviation deals.
