Air India Announces Deal To Buy 250 Airbus Planes To Transform Its Fleet
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Air India Announces Deal To Buy 250 Airbus Planes To Transform Its Fleet

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Air India Announces Deal To Buy 250 Airbus Planes To Transform Its Fleet

CEOInsights Team, 0

Air India announced on Tuesday(Feb 14th)that it will purchase 250 Airbus planes in a deal aimed at transforming the former national carrier after decades as a massive burden on the public purse. The purchase of the airline's first new plane since 2006 is part of an ambitious plan to return to profitability in the world's third-largest air transport market. It has signed a letter of intent to purchase 210 narrow body A320neo jets and 40 long haul A350 aircraft, with an unspecified number of options for additional aircraft, as part of its strategy to increase domestic market share and transform Indian airports into global travel hubs.

According to media reports, Air India plans to announce a similar purchase agreement with Boeing in the near future. Combined, the two deals could represent the single biggest fleet purchase in aviation history. "We are going through a massive transformation", said Air India chairman N. Chandrasekaran, announcing the Airbus agreement with French President Emmanuel Macron and Indian Prime Minister Narendra Modi in virtual attendance. "One of the most important things is a modern fleet which can perform for all routes".

Air India was founded in 1932 by the tea-tosteel conglomerate Tata Group, with the Indian government acquiring a majority stake after independence. By the end of the century, however, the venture was struggling to compete with Gulf carriers and low-cost airlines, was starved of investment, and was racking up billions of dollars in losses that dragged on the public purse. Tata, which is also chaired by Chandrasekaran, finally bought it back a year ago for $2.4 billion. According to Airbus forecasts, India's air traffic will grow at a 6.6 percent annual rate over the next two decades, nearly twice the global average.

"Today is a historic moment for India, for Air India and for Airbus", said Airbus chief executive Guillaume Faury, saying the size of the order "Demonstrates the appetite for growth in the Indian aviation industry". The European aircraft manufacturer already has an engineering centre in the country and sources some components from Indian suppliers. Macron said the deal highlighted the bond between Paris and New Delhi. "I want to tell everybody that for me, this very important contract and this achievement today is one of the milestones of the in-depth strategic and friendly partnership we have between India and France," he said.

Civil aviation was an important aspect of national infrastructure, according to Modi, who cited estimates that India will require more than 2,000 aircraft over the next 15 years.

This very important contract and this achievement today is one of the milestones of the in-depth strategic and friendly partnership we have between india and france


The announcement coincided with the Aero India show in Bengaluru, India's technology capital, where leading global aviation companies are showcasing their wares. Air India is still the country's largest international carrier, but its domestic market share in September was only 8.6 percent. It aims to have a 30 percent domestic market share by the end of 2027, while also expanding its fleet to cover more international routes. Tata Group is well-positioned to capitalise on the burgeoning market despite the conglomerate's six-decade absence from the air travel industry, aviation consultant Mark Martin told AFP. "They will have to recruit talent and return to the warm Indian hospitality that made it one of the top five airlines in the world in the 1960s and 1970s", he said.

Last May, New Zealander Campbell Wilson was appointed as Air India's first foreign CEO to overhaul operations and return it to profitability.

However, the airline was slammed for its handling of a Wells Fargo executive who was allowed to disembark as usual after allegedly urinating on an elderly woman aboard a flight from New York late last year.