Air India makes a record-breaking deal worth Rs 7 lakh crores with Boeing and Airbus

Many eminent personalities, including Joe Biden and Rishi Sunak, hailed the Air India deal.

In a bet on the explosive growth of air travel in Asia, Air India has committed to purchase 470 planes from industrial rivals Airbus and Boeing, representing the largest order of brand-new passenger aircraft in history.

According to the airline’s chairman, who spoke on Tuesday, the airline, which is a subsidiary of the Indian conglomerate Tata Sons, will purchase 220 aircraft from rival US company Boeing and 250 from European aviation leader Airbus.

210 of Airbus’s narrow-body A320 family aircraft and 40 of its wide-body A350 aircraft, which are often utilised on longer trips, will be delivered. Boeing will contribute 190 of its 737 Max narrow-body aircraft, 20 of its 787 Dreamliner, and 10 of its 777 wide-body aircraft.

When announcing the agreement, Biden said he looked forward to strengthening connections between India and the US with Prime Minister Modi. In 44 states, this acquisition will sustain over one million American jobs, many of which will not necessitate a four-year college degree, according to Biden.

During pandemic lockdowns, airlines all across the world experienced significant losses, but as travel restrictions were loosened, demand for air travel has soared back. Although the increasing traffic is anticipated to raise worldwide aviation carbon emissions, the number of airline passengers in Asia is anticipated to expand significantly in the next decades as countries get richer.

The Air India deals, which together are believed to be the largest in civil aviation history, are a part of a recovery plan by Tata, the company that owns Tetley’s tea in the UK and carmaker Jaguar Land Rover, after regaining control of the faltering airline in 2022.

Before being nationalised in 1953, the airline was established in 1932 as Tata Airlines. However, it had experienced financial issues recently.

The agreements were made with the backing of the highest political echelons. In a video announcement, Tata family member Ratan Tata, Tata’s chair Natarajan Chandrasekaran, and Airbus CEO Guillaume Faury were joined by the French president Emmanuel Macron and Indian prime minister Narendra Modi. On Tuesday, US Vice President Joe Biden praised the Boeing order.

The “landmark” agreement between Air India, Airbus, and Rolls-Royce was praised by UK Prime Minister Rishi Sunak, who asserted that it shows how the sky’s the limit for the country’s booming aerospace industry.

The agreement outperformed orders for 420 aircraft placed in 2017 by Indian rival IndiGo and 460 aircraft placed in 2011 by American Airlines. The Air India deal would be worth tens of billions of pounds at list pricing, but the airline would also benefit from significant reductions frequently offered for extremely big orders. The costs that airlines actually pay are a closely kept secret.

Even though the negotiations with Airbus took place months ago, the UK government was involved. Rishi Sunak hailed the Airbus contract, which the business claimed will be beneficial to the British economy to the tune of “billions of pounds.”

The first aircraft will go into service in late 2023, and the rest will follow starting in 2025.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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