AIR India announced a 470-plane order with Airbus and Boeing in what stands to be the largest purchase in commercial aviation history, underscoring the industry’s recovery from the coronavirus pandemic and the airline’s ambition to become a global force after years of contraction.

The carrier will purchase 250 Airbus jets including 210 A320neo family aircraft as well as 40 A350s, as well as 220 Boeing models comprising 190 737 Max, 20 787s and 10 of its largest 777X, according to separate announcements on Tuesday (Feb 14). The previous single largest jet order was a 460-plane deal by American Airlines in 2011.

The Airbus part of the deal was announced in an online briefing that was also attended by Indian Prime Minister Narendra Modi and French President Emmanuel Macron, while US President Joe Biden announced the Boeing commitment a few hours later. Air India has “significant options” to increase its Airbus order as the carrier grows, chairman N Chandrasekaran said, while Boeing said the carrier may eventually add 50 more 737 Maxes and 20 787s.

The long-awaited transaction, the final contours of which were reported by Bloomberg News last week, will help Air India reinvent itself by stocking its ranks with a fuel-efficient fleet that can take on domestic low-cost rivals and powerful Gulf airlines. Airbus no longer publishes list prices, while Boeing claimed the order was valued at US$34 billion at list price.

“The time is right for India to turn into an international hub,” Guillaume Faury, the Airbus chief executive officer said in the briefing with Modi. “India is well on its way.”

Growth potential

Air India will begin receiving the A350s before the end of 2023, Christian Scherer, Airbus’s sales chief, said in an interview on Tuesday. The initial batch of six planes were being built for Russia’s Aeroflot which is no longer able to take aircraft due to sanctions following the invasion of Ukraine. It is also ordering 34 of the larger A350-1000 model that Scherer says will give it the ability to offer non-stop services “deep into all the continents of the world”.

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According to Biden, the Air India order is Boeing’s third biggest sale of all time in dollar value and second of all time in quantity.

The US manufacturer projects that India will need 2,210 new planes over the next two decades, a number that’s broadly in line with Airbus’s forecast for the country. By comparison, China remains a far bigger market for Boeing — it expects the country will need 8,485 new aircraft through 2041.

Boeing’s win in India contrasts with its performance in China, where the company has essentially been frozen out of new orders amid recent geopolitical turmoil and the grounding of the 737 after two deadly accidents in rapid succession. China used to take a quarter of Boeing’s 737 output, and it’s been more 3 1/2 years since a mainland Chinese airline took delivery of a new jet from the company’s bestselling line.

Comeback attempt

Founded under Tata in the 1930s, Air India is attempting to win back traffic from Emirates and Qatar Airways, which have built a business model ferrying Indians to the US and Europe via their huge hubs in Dubai and Doha.

Air India’s mega deal is part of a push to expand India’s aviation industry, Modi said at the briefing. The country wants to be a hub for maintenance and repair operations for the region as well.

Commenting on the deal, UK’s Prime Minister Rishi Sunak said Air India’s order bolstered Airbus’s decision last year to invest over £100 million (S$161 million) at its wing assembly plant in Wales as well as add 450 jobs. It will also boost employment at Rolls Royce, which makes engines for the A350 model that Air India will order.

The order also comes as airlines globally upgrade and refresh their fleets to cash in on the rapid rebound in travel after Covid. Locking in fresh aircraft commitments is key for Air India’s expansion plan as the supply of newly built aircraft becomes increasingly constrained. BLOOMBERG