the story So Far: On February 14, Air India, now an airline owned by Tata Sons, announced Signed letters of intent with aerospace majors Airbus and Boeing to order a mix of new single-aisle and widebody aircraft. The airline has been upgraded from Airbus (250 aircraft) to 210 A320 and A321 NEO (140 A320s and 70 A321s) and 40 Airbus A350s (34 A350-1000s and 6 A350-900s) and 190 Boeing 737 MAX (737-8 and 737-10s), 20 Boeing 787-9s and 10 Boeing 777-9 jets from Boeing (220 aircraft) – 470 aircraft in total – for an estimated $112 billion, based on list prices, according to one aviation expert. Some business reports put it at around $80B-$85 billion. The deal – with aircraft delivery from late 2023 to around 2032 – is expected to transform India’s aviation landscape.
What are the other details about the order?
Based on a social media post by a Tata/Air India official (which was later removed) The airline may order an additional 370 more planes, making it 840 aircraft in total. Boeing has confirmed Hindu That its agreement includes options for 50 more 737 Max and 20 787-9s (which would mean an option for 300 aircraft from Airbus). When finalised, this will be Boeing’s largest order in South Asia. Overall, the Air India deal will be the biggest in commercial aviation history. A wall street journal report value An Emirates deal for 150 777Xs At the 2013 Dubai Air Show (since revised), for $76 billion.
Air India has an estimated 7,875 slot and code share agreements A significant portion of its revenue from international operations, Non-stop flights from India to the US are a high point, and with a reserve of bilateral rights, flights from the airline’s emerging hubs in Delhi, Mumbai and Bengaluru could be expanded to Europe, Asia, Africa and South America, in particular .
What about engine deals?
Air India orders 68 Trent XWB-97 engines and 12 Trent XWB-84 engines (A350-900) with 20 more options (A350-1000), making it the world’s largest operator of the Trent XWB-97 Is. Trent may operate on a 50% Sustainable Aviation Fuel (SAF) blend.
The airline has also ordered 40 GEnx-1Bs and 20 GE9Xs (for 787s and 777Xs) and placed a CFM order for over 800 LEAP engines (the largest in the world) for the A320 and 737 fleets (400 jets). Once again, GE and CFM engines can use all approved SAF blends.
Is the command ‘overkill’? What is the outlook for the sector?
India has been labeled as the world’s third largest domestic aviation market in a report by All India Association of Industries, which is expected to grow into the third largest air passenger (international and domestic) market by 2024, surpassing International Air Based on forecasts from the International Transport Association (IATA). , An IATA paper, ‘The importance of air transport in India’, based on 2017 data, estimates the air transport market in India “to grow by 262% over the next 20 years, resulting in an additional 370.3 million passenger journeys by 2037”. .
On February 14, the day of the Air India deal, Boeing released its ‘2022 Commercial Market Outlook (CMO) for India’, where it projected a long-term passenger growth rate of around 7% annually till 2041. It said about India. Domestic passenger traffic had recovered to 98% of pre-COVID-19 levels, despite the expansion of the international network. Thus, India’s air development had moved from reform to development. In addition, the growth focus for the domestic market was expected to double by the end of the decade. As a result, Indian airlines will add 7% more supplies in the first half of 2023 than in 2019. Based on strong domestic traffic, 90% of new aircraft deliveries over the next 20 years will be single-aisle aircraft. Of the estimated 2,210 new aircraft that India will need over the next two decades (excluding cargo aircraft), 1,983 will be single-aisle jets, of which 227 units, or 10% of new jets, will be widebody jets.
In a look at the domestic market, it was reported that a modal shift from train to air travel could boost demand for aircraft. While “the daily train traffic is 2,30,00,000 passengers, the daily aviation traffic is 3,60,000 passengers”. It said a change of slightly more than 1% would double the aviation market. Another point was that Indian carriers (as 6.8% in South Asia) will account for 5.3% in South East Asia, 5.2% in Africa, 4.9% in China and air traffic global growth rate (in terms of regions) through 2041. are running. 4.4% in Latin America. Quoting Dave Schulte, Boeing’s commercial marketing managing director for Asia Pacific, the report says, Indian carriers “will outpace global growth by about 7%, and deliver more than 80% of new airplanes in this market”. development”, while “20% of the new aircraft would be for replacement of older jets”.
The forecast for the India cargo market is 80 aircraft by 2041.
What about other forecasts?
A statement by Airbus Chief Commercial Officer and Head of International Christian Scheer highlights India’s economy over the next decade as the “fastest expanding G-20 nation” and with “a growing middle class spending more on air travel”. . “Rapidly growing traffic, including long-haul markets in the United States, Europe and Asia-Pacific…”
This would fit the performance range of the airline’s large fleet order: the range of the 2 A350 variants is 15,372 km and 16,112 km respectively, for the 787-9 it is 14,010 km and the 777X, 13,500 km.
Another report by the Center for Aviation (CAPA), ‘India: The next growth engine of global aviation’, published on February 8, 2023, states that with India’s traffic recovery at the strongest in the world, Indian airline There is a lot of hope. market [almost] 100% privately operated and continuing with the development of airport infrastructure. As per CAPA’s assessment, Indian carriers will soon be expected to place orders for around 1,500-1,700 aircraft over the next two years or so (24-plus) months. It added that with Air India’s order for 70 widebodies, this “will mark the beginning of a much-needed focus on long-haul operations”.
It also sounded a note of caution, i.e. ordering planes was easier but addressing critical issues like crew shortage, preparing the aviation ecosystem to absorb these orders, and especially a well-designed institutional framework. It was a challenge to do.