Tata Sons announced that it has signed a letter of intent to acquire 250 aircraft from European manufacturer Airbus. Air India will buy 40 wide-body A350 planes and 210 narrow-body aircraft.
Later on the same day it was announced that Air India would buy 220 Boeing planes for $34 billion.
This makes for a total of a 470-plane order for the airline. It is being touted as the largest purchase in commercial aviation history.
Air India had acquired new aircraft more than 16 years ago. Since 2005, the airline has not purchased any aircraft and the last order was for 111 aircraft whose deal was worth USD 10.8 billion.
“We have built a very good relationship with Airbus. Today I am happy to announce that we have signed a letter of intent to acquire 250 aircraft from Airbus,” Natarajan Chandrasekaran, Chairman of Tata Sons said.
During a virtual event being attended by Prime Minister Narendra Modi and French President Emmanuel Macron, among others, Chandrasekaran said a letter of intent has been signed with Airbus for the acquisition of the aircraft.
The wide-body aircraft will be used for ultra-long flights.
Since taking over Air India early last year, the Tata Group has engaged with aircraft manufacturers as part of revamping the fleet. Chief executive Campbell Wilson had said that Air India was planning to expand its fleet and global network, aiming to increase its market share to 30% on both domestic and international routes from India over the next five years.
The new narrowbody planes will enable the airline’s plans to serve short-haul destinations within a four- to five-hour range as it aims to be a competitor to IndiGo, which currently has more than 50% of the domestic market. The widebody aircraft will help it increase its footprint across North America, Europe and Australia.
Tata Sons is in the midst of consolidating its aviation business. AirAsia India and Air India Express have been merged into one low-cost unit and Vistara will be absorbed into Air India to create a single full-service airline.
Air India, since its change of ownership, has returned to service 10 narrowbody and six widebody aircraft that had been grounded.
“As new aircraft start coming in along with improvement in product and the older ones are retired, the unit cost will also improve significantly which will take the airline close to net profitability,” a source aware of the development told ET Bureau.
Air India is likely to add almost 50 aircraft by the end of FY24, which will increase its capacity by about 50%.
Earlier on January 27, Wilson said the airline was finalising a historic order of new aircraft.
India’s ‘Make in India – Make for the World’ approach is leading to the opening up of new avenues in the aerospace manufacturing sector: PM Modi interacts with French President Emmanuel Macron at the launch of the new Air India-Airbus Partnership, via video conferencing.
Air India is looking for a remix of aircraft to boost their domestic and international network through recent orders, sources said. Soon after the divestment of the airline, CEO Campbell announced in its speech to the AI employees that the airline is going for a historic order.
On the occasion of its first anniversary on January 27 this year, Air India said the airline will transform itself over the next five years to being among the best globally with an Indian heart. When the Tata group took charge last year, the public perception was that it wanted to take the airline back to the glory days under the legendary JRD Tata.
Soon after winning the bid for Air India, Chandrasekaran said that “We are excited to bring Air India back to the Tata group and are committed to making it a world-class airline.”
Source: Economic Times