By Siddharth Philip, Anurag Kotoky, Charlotte Ryan and Julie Johnsson
Air India Ltd is considering ordering as many as 300 narrowbody jets, according to people familiar with the matter, in what could be one of the largest orders in commercial aviation history as the formerly state-run airline looks to overhaul its fleet under new ownership.
The carrier may order Airbus SE’s A320neo family jets or Boeing Co’s 737 Max models, or a mix of both, the people said, asking not to be identified because the discussions are confidential. A deal for 300 737 Max-10 jets could be worth $40.5 billion at sticker prices, although discounts are common in such large purchases.
Winning a narrowbody order in India would be a coup for Boeing, as rival Airbus dominates the skies in the country, the world’s fastest-growing aviation market before the Covid pandemic. IndiGo, operated by InterGlobe Aviation Ltd, is the world’s largest customer for the European manufacturer’s best-selling narrowbodies, ordering more than 700, and others including Vistara, Go Airlines India Ltd and AirAsia India Ltd fly planes from the same family.
Production and delivery of 300 planes would likely take years or even more than a decade. Airbus builds about 50 narrowbody jets in a month, with plans to increase that to 65 by the middle of 2023, and 75 by 2025.
Representatives for Air India and Boeing declined to comment. An Airbus representative said the company is always in contact with existing and potential customers, but any discussions are confidential.
“This order presumably involves new methods of financing to play out in the right manner, including factoring in macroeconomic trends -- notably the fluctuating rupee and rising inflation,” said Satyendra Pandey, managing partner of aviation advisory firm AT-TV. “Some airlines have placed voluminous orders only to find that they are unable to line up financing at favourable terms. While it is not an outcome that one envisions and certainly not with a group such as the Tatas, nevertheless it has to be planned for.”
Air India’s owner Tata Group is also close to an order for Airbus A350 long-range jets that are capable of flying as far as the US West Coast from New Delhi, Bloomberg News reported this month. Once known for its premium services and advertisements featuring Bollywood stars, the airline still has lucrative landing slots at most major airports, but it faces competition from foreign airlines with non-stop services to India, as well as carriers that fly via hubs in the Middle East.
Tata bought the airline earlier this year in the most high-profile privatisation under Prime Minister Narendra Modi. It is expected to consolidate its aviation businesses, including four airline brands. An order for new planes, especially with favourable terms on long-term maintenance, would help it cut costs and compete better with rivals that offer very cheap fares.