Air India inks ‘historic’ deal with Airbus, Boeing: Why this is significant for India

Air India has sealed a massive deal with Airbus and Boeing where the airline will buy record 470 passenger jets. N Chandrasekaran, chairman of Tata group which owns Air India, said this deal would modernise the airline’s fleet and help it to “dramatically” increase its network, reported BBC. Hailing the agreement between Air India and Boeing as a ‘historic’ deal, United States president Joe Biden said it will provide “over one million American jobs across 44 states”. Biden also talked to Prime Minister Narendra Modi on a call to welcome the landmark deal which surpassed American Airlines’ 460-plane deal in 2011. Let’s take a look at this new aviation deal in detail and what it means. Details of the Air India deal

Air India has announced that it will purchase 220 planes from Boeing and 250 from Airbus.

As per Chandrasekaran, the Airbus order consists of 210 A320neo narrowbody planes and 40 A350 widebody aircraft, which Air India will use for “ultra-long routes”, reported Reuters. Airbus did not disclose the financial terms, but the deal is expected to be worth tens of billions of dollars, reported Associated Press (AP). Boeing will supply 190 of its 737 Max single-aisle planes, 20 of 787 Dreamliners widebodies and 10 of 777X to the Indian carrier. [caption id=“attachment_12160832” align=“alignnone” width=“640”] Boeing will supply 190 of its 737 Max single-aisle planes, 20 of 787 Dreamliners widebodies and 10 of 777X to Air India. AP (Representational Image)[/caption] The Boeing agreement also includes customer options for an additional 50 737 MAXs and 20 of its 787s, which would take the total to 290 jets costing around $45.9 billion, as per AP. Reactions to the deal At a virtual event attended by the Tata Sons chairman and French president Emmanuel Macron, Modi said the Air India deal reflects deepening ties between India and France, as well as the successes and aspirations of India’s civil aviation sector. “This achievement shows that Airbus and all its French partners are fully dedicated to develop new areas of dedication with India,” Macron said at the event, as per Reuters. The Indian prime minister and Biden acknowledged the Air India and Boeing deal as a “shining example of mutually beneficial cooperation”. The two leaders also expressed a desire to bolster bilateral cooperation in space, semi-conductors, supply chains and defence co-production.

In a statement released by the White House, Biden said the deal reflects the “strength of the US-India economic partnership”. “Together with Prime Minister Modi, I look forward to deepening our partnership even further as we continue to confront shared global challenges – creating a more secure and prosperous future for all of our citizens,” the US president said. British prime minister Rishi Sunak also said the Airbus-Air India deal would generate employment opportunities around the UK. “This is one of the biggest export deals to India in decades and a huge win for the UK’s aerospace sector,” he tweeted on Tuesday. “With wings from Broughton and engines from Derby, this deal will support jobs around the country and help deliver one of our five priorities – growing the economy.”

ALSO READ: Can C919, China’s first indigenous passenger jet, unsettle Airbus and Boeing’s duopoly? Why is it significant? The mega deal, which was over a year in the making as per Reuters, is significant for all the parties. It has put Air India in the league of “aspiring” global airlines, noted Reuters. The debt-ridden carrier, which was taken over by the Tata Group in early 2022 , plans to turn into “a world-class proposition”, Chandrasekaran has said. Experts say the bulk order indicates Air India’s intent to reclaim its “pole position” in the domestic aviation market, as well as expand its presence in international routes, BBC reported. [caption id=“attachment_12160842” align=“alignnone” width=“640”] Tata-owned Air India plans to become ‘a world-class proposition’. Reuters File Photo[/caption] “These orders directly synergise Air India’s fleet with Lufthansa and Singapore Airlines - all part of Star Alliance, the world’s largest global airline alliance,” Mark Martin, an aviation analyst, told BBC. “To me it looks like a big game plan to counter the dominance of Gulf carriers, for whom Star Alliance has been an arch-nemesis”. Martin also believes the large fleet that will be acquired by Air India will help in reducing the dependence of Indian flyers on foreign carriers such as Emirates, Qatar Airways, Etihad and other Middle Eastern airlines. The purchase of wide-bodied aircraft like the A350s will allow Air India to enter markets like the US and Australia directly by offering non-stop flights from India to these places, as per BBC. The deal will also help the erstwhile national carrier to challenge its domestic rival Indigo, which as per Reuters is also mulling ordering 500 jets. As per the Reuters report, the Air India deal “reflects a strategy to recapture a solid share of trips between India’s diaspora and cities such as New Delhi and Mumbai that are currently dominated by foreign rivals such as Emirates.” The report added: “The aviation deal is expected to have industrial spin-offs, with Macron pledging co-operation in other sectors”. For Boeing, the business with India comes at a time when the airline has been embroiled in increased tensions between the US and China. Beijing had grounded Boeing 737 MAX in 2019 following two deadly crashes in Indonesia and Ethiopia, only recently lifting the ban. Moreover, Air India’s new fleet will help in catering to the needs of India’s growing aviation market. Demand for air travel is again seeing a surge in India and other parts of Asia after the COVID-19 pandemic. As per ICRA, with 986 lakh flyers, domestic air traffic increased 63 per cent year-on-year between April and December 2022 in India. The deal can also create jobs for Indians. The Tata group chairman has hinted that some of the aircraft parts could be manufactured in India, which will boost domestic manufacturing and create job opportunities, noted Buinessline. As per Reuters, the announcement is also a major win for engine maker CFM International, a joint venture between General Electric and France’s Safran, which will provide engines for 210 Airbus narrowbody jets. Bigger planes will be powered by GE or Britain’s Rolls-Royce, Reuters reported. Independent aviation adviser Bertrand Grabowski told Reuters that the deal is “important for the industry because, given the recent turbulence in the China market, the alternative growth market is India," “India is also sending a strong political signal that it wants to remain attached to the West at a time when it has appeared ambiguous on Russian sanctions,” Grabowski added. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram .