Air India planning to buy 300 aeroplanes in largest-ever order
What's the story
Tata Group-owned Air India is mulling one of the largest orders in commercial aviation history by ordering 300 narrowbody jets. The company might order Airbus's A320neo models or Boeing's 737 Max jets. Buying a mix of both is also a possibility. Purchasing new planes with favorable terms on long-term maintenance would aid Air India in cost-cutting and competing with rivals offering cheap airfares.
Context
Why does this story matter?
This order will be a big deal for both Boeing as well as Airbus as 300 units of an airplane would mean a multi-billion dollar agreement. However, the manufacturing and deliveries could take around a decade. Air India, which was privatized earlier this year, is looking for ways to modernize its fleet and take on global rivals.
Business
IndiGo is one of Airbus's biggest customers
Airbus dominates Indian skies, the world's fastest-growing aviation market prior to the COVID-19 pandemic. IndiGo has ordered over 700 narrowbodies from the European company. Vistara, AirAsia, and Go First are also its customers. Airbus builds roughly 50 narrowbody jets per month and plans to increase it to 65 by mid-2023, and finally 75 by the middle of this decade.
Information
New financing methods factoring in macroeconomic trends will be employed
The order for Air India is tipped to involve new methods of financing factoring in macroeconomic trends, especially rising inflation and the fluctuating value of the Rupee. This will prevent the deal from collapsing due to the inability to line up financing at favorable terms.
Diversification
Air India is also buying Airbus A350 jets
Air India is also purchasing Airbus A350 long-range jets that are capable of flying from New Delhi to the west coast of the US. The carrier is known for its premium services and lucrative landing slots at most major airports worldwide. It rivals brands that fly via hubs in the Middle East and those with non-stop services to our shores.