Daily Management Review

Tata's Air India To Secure Half Of The Jumbo Plane Order


Tata's Air India To Secure Half Of The Jumbo Plane Order
According to industry sources, Air India will sign a half-order for 495 jets with Boeing and engine suppliers General Electric and CFM International on Friday, as its new owner seeks to revitalize the airline and compete with larger rivals.
Air India is set to place an order for 190 Boeing 737 MAX narrowbody planes, as well as 20 Boeing 787s and ten Boeing 777Xs, on the one-year anniversary of Tata Group's takeover of the former state-run carrier, according to two sources.
The second half of the order, which includes approximately 235 Airbus single-aisle jets and approximately 40 Airbus A350 widebody aircraft, is expected to be formally completed in the coming days, according to industry sources.
Senior Boeing executives, including Stanley Deal, CEO of Boeing Commercial Airplanes, as well as executives from GE and CFM, are expected in India on Friday to commemorate the agreement.
Despite earlier expectations of a single coordinated announcement, it is unclear when either deal will be made public, particularly with the Aero India air show in February, when deals like this are typically revealed.
Boeing and Airbus declined to comment, as did CFM's joint venture partners GE and Safran.
Air India did not respond to a request for comment, but in a note to employees on Friday, the airline said it is "finalising a historic order of new aircraft to power future growth," marking its first anniversary under Tata's ownership.
Reuters reported last month that Air India was nearing a deal for 500 planes.
Once completed, the order will elevate Air India into the ranks of large global airlines, making it a powerful customer for planemakers and suppliers at a time when its home market is experiencing a strong post-COVID-19 travel surge.
Domestic passenger air traffic in India increased 47% year on year in 2022, according to government data.
Analysts warn that given the connectivity carved out by domestic and international rivals, the airline will face intense competition.
India, which is on track to overtake China as the world's most populous country, has a sizable but underserved air travel market, which is dominated by budget carrier IndiGo. However, Middle Eastern airlines such as Emirates and Qatar Airways carry the majority of India's outbound passenger traffic.
Under its new ownership, Air India hopes to restore its reputation as a storied carrier with impeccable service and world-class planes both at home and abroad.
It has restored nearly 20 aircraft that had been grounded for years due to a lack of parts and funds.
The airline also announced that it will spend more than $400 million to refurbish its entire legacy wide body fleet of 27 Boeing 787-8s and 13 777s.
The goal is to capture 30% of the domestic market within the next five years, closing the gap with market leader IndiGo. It also wants to "multiply" its share of international travel, according to the airline's CEO, Campbell Wilson.
Tata's four airlines have a combined market share of 24%, including two low-cost carriers, Air India and Vistara, a joint venture with Singapore Airlines.
Analysts believe Air India has the potential to reclaim some passengers from rival Gulf carriers, but only if it matches their fleet and service quality. Nor will the domestic battle with IndiGo be possible without stiff competition from a carrier that is rapidly expanding.