Air India Expands Fleet with New Airbus Order and Eyes Boeing for Future Purchases

Feature and Cover Air India Expands Fleet with New Airbus Order and Eyes Boeing for Future Purchases

Air India is making bold moves to reclaim its position among the world’s top airlines by adding to its fleet. The airline has recently placed an order for 85 new Airbus jets and is now exploring further acquisitions from Boeing, according to industry insiders. This expansion comes shortly after Air India’s monumental purchase of nearly 500 aircraft from Airbus and Boeing, marking a significant milestone in its ongoing efforts to modernize its operations and regain prominence.

The latest Airbus order surfaced as part of a regular industry update. At the same time, the airline mourned the loss of Ratan Tata, a pioneering figure in Indian business and aviation, and the former chairman of Tata Group, Air India’s parent company. The timing of the announcement underscored the profound connection between Tata and the aviation sector, with Ratan Tata being instrumental in shaping Air India’s trajectory.

On October 9, Airbus disclosed that an unnamed buyer had ordered 75 A320-family aircraft and 10 long-haul A350 planes. According to data from Cirium Ascend, the deal is valued at approximately $6.3 billion after the standard industry discounts. Airlines often remain anonymous during such purchases to keep their fleet strategies confidential, thus preventing competitors from gaining insights.

However, three sources within the industry revealed that Air India is indeed the airline behind the latest Airbus purchase. The order involves the exercise of previously held options, coming just a year after Air India committed to acquiring 250 new jets from Airbus and 220 from Boeing, all part of its strategy to overhaul its fleet and restore its stature in global aviation.

Two of these sources also mentioned that Air India is currently in discussions about the possibility of placing an additional order with Boeing. This would be another step in the airline’s ongoing efforts to expand and modernize its fleet, an essential component of its multi-billion-dollar transformation project aimed at competing with well-established airlines in the region.

As of now, Air India has not responded to any requests for comments regarding the Airbus order or the ongoing negotiations with Boeing. The first reports of these developments were made by Bloomberg News.

Founded in 1932 by J.R.D. Tata, Air India was once considered among the leading airlines in the world. The Tata family has long been connected to the airline, particularly through Ratan Tata, who took over leadership of the Tata conglomerate in 1991 after J.R.D. Tata. Ratan Tata held the chairman role for over two decades, guiding the company through significant changes in various sectors, including aviation.

Ratan Tata was a key figure in Tata Group’s ventures into the airline industry, notably forming a joint venture with AirAsia. He also played a pivotal role in the establishment of Vistara, Tata Group’s full-service airline developed in partnership with Singapore Airlines. Ratan Tata’s love for flying and fast cars was well known, and his passion for aviation continued to drive the group’s ambitions in the airline sector.

The Tata Group’s efforts to acquire Air India stretch back several years, including an earlier attempt to take over the airline during a privatization process that was ultimately canceled by the Indian government. In 2021, the Tata Group succeeded in bringing Air India back into its fold under a renewed privatization initiative. Upon the acquisition, Ratan Tata celebrated the airline’s return but acknowledged the immense challenge of rebuilding it from the ground up after years of mismanagement and operational decline.

Since its return to Tata’s ownership, Air India has embarked on an extensive overhaul to revitalize its operations, infrastructure, and service offerings. The national carrier is now competing against industry giants such as IndiGo, which currently holds the title of India’s largest airline and placed a record-breaking order for 500 jets in 2023.

Last year, Air India finalized an unprecedented order for 470 aircraft, dividing the order almost evenly between Airbus and Boeing. Neither manufacturer had the production capacity to fulfill the entire order alone, prompting the airline to split the purchase between the two. This order was instrumental in positioning Air India to modernize its fleet and regain a competitive edge in both domestic and international markets.

Nipun Aggarwal, Air India’s Chief Commercial and Transformation Officer, played a crucial role in securing the deal. Leading negotiations in London, Aggarwal was able to secure a significant number of options and purchase rights for the airline. Specifically, Air India negotiated rights to purchase an additional 370 aircraft from both Airbus and Boeing, beyond the 470 jets included in the original order. These options give Air India flexibility in adjusting its fleet size based on future growth and market demands.

Although the airline disclosed that it still retains options for 70 additional Boeing jets, it has not provided specific details regarding any options related to Airbus. The talks with Boeing are ongoing and are part of Air India’s broader strategy to expand and enhance its fleet.

Both Air India and IndiGo face the challenge of securing timely deliveries of their new jets. Aircraft production delays, especially following the disruptions caused by the COVID-19 pandemic, have affected delivery schedules for many airlines. Analysts warn that such delays could impact Air India’s ambitious plans.

CAPA India, a consultancy that monitors the aviation industry, maintained its forecast of 6% to 8% domestic traffic growth for the Indian aviation market in the fiscal year ending March 2025. However, CAPA India also expressed concerns over several risks that could hinder this growth, including geopolitical tensions, rising oil prices, and ongoing disruptions in global supply chains. These factors could complicate Air India’s ability to execute its expansion plans on schedule.

Despite these challenges, Air India’s recent orders underscore the airline’s determination to reclaim its position as a leading global carrier. With the support of the Tata Group and its strategic partnerships, Air India is betting on its ability to compete with both domestic and international rivals in the coming years. The latest Airbus order, combined with the possibility of further purchases from Boeing, signals Air India’s intent to expand aggressively and modernize its fleet as it aims to recapture its former glory.

Leave a Reply

Your email address will not be published. Required fields are marked *

More Related Stories

-+=