MC Explains | How Air India's plans to dominate Indian aviation start with its massive order of 470 jets

The Tata Group's takeover of Air India last year has been the wind beneath the wings of the airline which for decades had been struggling with losses and losing market share.

In its latest move to lift Air India off the ground, the Tata Group last week signed agreements for two orders for around 470 aircraft with both Boeing and Airbus as it moves towards restoring the glory days of the airline.

Let's take an in-depth look at Air India's massive order for planes and the impact it will have on the airline and Indian aviation

Q. What is the order, which planes will arrive and what are the features of the jets?

A. Air India has agreed to purchase 250 Airbus planes comprising 140 A320neo, 70 A321neo, 34 A350-1000 and six A350-900 aircraft.

Air India will also buy 190 Boeing MAX aircraft, 20 Dreamliners (787-9) and 10 777-9 planes from Boeing. The 250 Airbus aircraft and 220 Boeing planes are all firm orders.

Apart from the firm order, Air India has the option to buy 70 additional Boeing aircraft —50 MAX planes and 20 Dreamliners. If the option is exercised, the Boeing order would go up to 290 planes.

Apart from the order for planes, Air India has also signed a deal with GE Aerospace for the largest LEAP engine order of more than 800 LEAP engines for the airline's orders of 400 Airbus and Boeing single-aisle aircraft.

Besides, GE Aerospace has an order for 40 GEnx-1B and 20 GE9X engines as well as a multiyear engine services agreement with respect to 20 Boeing 787 and 10 Boeing 777X aircraft.

Air India also signed a memorandum of understanding for 68 Rolls-Royce Trent XWB-97 engines, making Air India the only Indian airline that has ordered the XWB, which is also the largest order ever for the engine that exclusively powers the Airbus A350-1000.

Air India also ordered 12 Rolls-Royce Trent XWB-84 engines, the only engine option for the Airbus A350-900, an order which is again considered to be substantial.

Out of the planes ordered by Air India, the 140 A320neo, 70 A321neo and 190 Boeing MAX aircraft are all narrow-body planes.

A narrow-body aircraft, also known as a single-aisle aircraft, is a relatively smaller plane that is often used to operate short-haul international flights and domestic flights. A narrow-body aircraft can carry as few as 4 passengers and up to as many as 300.

Narrow-body planes usually have just one cabin—Economy Class. But sometimes it can have an additional Premium Economy and Business/First Class of seating.

The 34 A350-1000, six A350-900, 20 Boeing Dreamliners (787-9) and 10 Boeing 777-9 planes are wide-body aircraft.

A wide-body aircraft is a bigger plane with far larger passenger capacity. Wide-body aircraft are almost always used to operate long-haul and medium-haul flights but can occasionally be used on shorter flights.

Q. What is the estimated size of the Air India order?

A. According to Mark Martin, founder and CEO of Dubai-based aviation consulting firm Martin Consulting, Air India's order in terms of a ticket size is roughly $110 billion.

Q. Why is Air India buying so many planes?

A. Air India has not ordered new planes since 2006, even as every other airline in the country has grown.

The erstwhile Indian Airlines and Air India had placed an order for a total 111 single-aisle Airbus and twin-aisle Boeing planes that year. The two government-owned carriers of the time were later merged under the Air India brand.

Air India's decision to not place a new order since then has led to the airline losing market share in both the domestic and international segments. To regain market share and increase its presence in the country and beyond, Air India needs capacity and that will come with the new aircraft ordered.

An existing lot of Air India and Air India Express planes are also due for replacement with modern aircraft that are not only environmentally friendly but also consume 15 percent less fuel, leading to an improved bottom line.

Lastly, large orders come with bulk discounts.

Q. How will Air India deploy these aircraft?

A. The aviation industry worldwide is eager to see how Air India will deploy the Airbus and Boeing aircraft it has just ordered.

According to Martin, the Tata Group will face a challenge in upgrading and migrating the structure of Air India to handle such a complex fleet.

"The A350 is a generation five-plus aircraft and to bring in such advanced technology into India would need an entire shake-up and overhaul of the way Air India has been functioning so far," Martin said.

He added that the overhaul of operations will include skills, processes, technology, IT, innovation, software systems and integrated data management.

"Bringing in every element of technology will help to migrate and make Tata formidable and aligned to handle the new fleet," Martin said.
Air India currently operates around 140 planes, with the majority being narrow-body planes.

It mostly uses Airbus planes for domestic operations, while its wide-body fleet used in international long-haul flights is made up of Boeing aircraft. Air India Express, operates only Boeing narrow-body planes.

The expectations around the industry are that Air India will let AIX Connect continue to operate Boeing planes which will serve as the low-cost carrier for the group. All the 190 Boeing MAX aircraft are likely to be operated by Air India Express and will be used primarily for the domestic market in India.

The 140 A320neo and 70 A321neo planes will be operated by the merged entity of Vistara and Air India as the group's full-service carrier. Air India will learn from the expertise of Vistara, which already operates a fleet of nearly 50 Airbus narrow-body planes, to deploy its full-service experience in the domestic market.

Air India already operates 30 Dreamliners, three of which are the 787-9, while 27 are 787-8. This opens up the possibility of the low-cost arm operating Dreamliners.

The A350-1000 and the 777-9 serve different profiles. The 777-9 could be used to fly to markets such as London, which are constrained in terms of both slots and bilateral agreements, while the A350-1000 will fly non-stop to North America.

The Dreamliners, on the other hand, will help open up new routes since they come with an optimum mix of seating and range. These routes can be handed over to Air India when they mature.

In all probability, the B787-8 would start leaving the fleet by the time the last of the planes from this new order come in.

Q. What is the significance of the Air India order?

A. The positive impact this deal has had can be understood from statements made by US President Joe Biden, French President Emmanuel Macron and UK Prime Minister Rishi Sunak. Biden dubbed it a “landmark deal”.

"Air India is not just another airline, it is a national project, it holds the hopes and aspirations of millions of Indians," Natarajan Chandrasekaran, chairman of Tata Sons, the holding company of the Tata Group, had said in an online press conference while announcing the deal on February 14.

Shortly after the Air India-Boeing deal was announced, White House secretary Gina Raimondo wrote: “Today, Air India announced it’s purchasing over 200 American-made aircraft. That's Boeing's third-biggest sale of all time and will support over one million jobs across 44 states. It's a win for American workers and reaffirms the strong relationship between our two nations.”

Her statement comes amid a global economic meltdown that has seen mass layoffs.

"I am proud to announce today the purchase of over 200 American-made aircraft through a historic agreement between Air India and Boeing. This purchase will support over 1 million American jobs across 44 states, and many will not require a four-year college degree," Biden said.

Sunak also hailed Air India's historic orders, saying they would create jobs and boost exports from Britain, where the European planemaker designs and makes aircraft wings.

"The wings will be designed in Filton, and assembled in Broughton, which is expected to bring an additional 450 manufacturing jobs and more than £100m of investment to Wales. The large A350 aircraft are exclusively powered by Rolls-Royce XWB engines, which are assembled and tested in Derby," the press release from his office said.

Macron also hailed the Air India-Airbus deal and said it paves the way for a “new stage in the India-France relationship”. He wrote, “The contract that Airbus and Tata Sons signed this morning marks a new stage in India and France’s strategic partnership,” and thanked Prime Minister Narendra Modi for showing “confidence in France” and its industry.

During a videoconference with Modi, Macron said, “India is going to be the world’s third-largest market in the aviation sector.” Modi said India will need more than 2,000 aircraft over the next 15 years, and the “historic announcement will help meet this growing demand".