Introduction
Air India’s massive 470 aircraft deal has sparked a buzz of anticipation in and around the world’s fastest-growing aviation market: India. A dozen variables, including expanding middle-class population and disposable incomes, a demographic dividend, over 1,200 planes on order by several Indian airlines, and improved aviation infrastructure, are all driving industry expansion.
Airbus will deliver 250 and Boeing will deliver 220 of the 470 firm aircraft orders, with the option to buy an additional 370 planes from the two aircraft manufacturers. The firm order consists of 70 wide-body aircraft.
Massive Orders by Leading Airlines of India This 2023
More than 1,100 aircraft have been ordered by Indian airlines for delivery in the next few years. IndiGo, the country’s largest airline, will acquire around 500 jets, while Go First will receive 72 planes, Akasa Air will receive 56 planes, and Vistara will receive 17 planes. In addition, SpiceJet already has aeroplanes on order. These are all narrow-body aircraft. The domestic airlines, along with Air India, have at least 1,115 planes on order.
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In India, there are around 700 commercial aircraft, and the majority are narrow-body planes. In addition, there are approximately 470 Airbus planes and 159 Boeing planes for commercial service. Vikram Rai, Country Head, South Asia & Indonesia at GE Aerospace, stated that India has the potential to expand in both the wide-body and narrow-body markets. He provided context by stating that pre-COVID traffic in India was about 75 million international passengers, with 60-65 percent using foreign airlines.
Since the Indian economy is improving, Indian passengers have a high ratio to go overseas. Therefore, the ratio is expected to increase approximately 120-125 million in the next 7-10 years from 75 million”. Therefore, India is the world’s 3rd largest and fastest-growing aviation market.
Union minister Jyotiraditya Scindia told PTI on August 7, last year, the day Akasa Air began commercial operations, that the country’s civil aviation sector is poised for phenomenal and healthy growth in terms of passengers, aircraft, and airports, with the number of air travellers projected to reach 40 crores by 2027. Additionally, the government plans to expand the capacity of aeroplanes and air connectivity service by 15% so 100 to 110 planes each year will be purchased. Also, by the year 2027, India plans to have around 1,200 more aircraft.
India to Increase International Traffic
At the moment, India has at least 147 operating airports, up from 74 almost nine years ago, thanks in part to the government’s ambitious regional air connectivity initiative UDAN.
While discussing Air India’s jet purchase, V Thulasidas, who served as the airline’s CEO from December 2003 to March 2008, stated that the country now has world-class airports that can serve as hubs.
India as a country of billions of people should have multiple airport hubs like the EU. These hubs could be Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Kochi, and in other cities around the country. A crucial lesson once Air India begins operating the new aircraft is that the Indian carrier would primarily cater to overseas travel for Indians.
“About 125 planes out of the 470 will be for replacement. As they have secured their expansion ambitions for at least the next 10 years,” said an aviation industry specialist who has long been linked with the airline business. According to him, the addition of wide-body planes will aid in fleet expansion as well as operations on both the East and West coasts.”
Air India will offer more direct air connectivity up to 8-10 hours and 16 hours of non-stop flights if the air carrier is able to meet customer expectations and requirements in other factors of flight operations. As a result, this can change the game for Air India in the aviation industry.
These actions will also help in regaining India’s foreign traffic from abroad carriers. Air India can also establish international traffic hubs around the country, which was not conceivable in the absence of a big player, according to the expert, who spoke on the condition of anonymity.
Ajay Sawhney
According to Ajay Sawhney, Partner at law firm Cyril Amarchand Mangaldas, the Air India order would strengthen Star Alliance partners’ footprint from India to Europe and the United States.
For air connectivity, Indian flyers have heavily counted on Emirates, Etihad, and Qatar in the past few years. However, Air India’s latest aircraft deal for multiple planes order will strengthen the star alliance community, which in turn would offer more options to Indian as well as South East Asian passengers into Europe and the US, likely at lower prices,” he said.
Another aviation industry analyst stated that the sale of Air India to Tata Group and now the aircraft order demonstrate the effectiveness of the government’s disinvestment drive and the ability to complete major, politically delicate transactions.
Nowadays, foreign airlines carry around 60% of Indians flying on overseas routes. Indian airlines carry roughly 40 out of 100 such passengers.
This situation will change as Air India begins to introduce new aircraft, which will also enable additional air connection to global markets from state capitals as well as significant business and tourism sites, he added.
According to him, aviation has a multiplier economic effect, and the operation of one aircraft may generate between 150 and 200 employees, depending on its size.
In the upcoming years, the Indian economy will improve along with promising demographic variables such as rising middle-class discretionary income projected to result in more travel and commerce.
Campbell Wilson
Around hundreds of projects and initiatives across 22 main work streams are ongoing to reinvent the airline across three phases: taxi, take off, and climb, Air India CEO Campbell Wilson stated on January 27 on the first anniversary of Tata Group’s ownership of the air carrier.
The Tata Group is also combining Air India Express and AirAsia, as well as Vistara and Air India. With the introduction of new aircraft, Air India might consider focusing on routes between India and Gulf nations, which are usually in high demand. Former Civil Aviation Minister Suresh Prabhu stated that the Gulf industry is also profitable.
With the industry-leading fuel economy of the 737 MAX, 787 Dreamliner, and 777X, Air India is all set to meet and attain the development objectives and lead as a world-class global airline with an Indian heart, said Stan Deal, President, and CEO of Boeing Commercial Airplanes, on February 14.
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