The acquisition of Air India by the Tata Group last year has given the airline new life after decades of grappling with deficits and market share losses.
The Tata Group last week secured deals for two orders with both Boeing and Airbus for roughly 470 aircraft as it works to bring back the airline’s golden days. This is their latest effort to get Air India back on its feet.
Tata Air India Airlines Let’s examine in detail Air India’s large aircraft deal and its implications for the airline and Indian aviation.
250 Airbus aircraft, including 140 A320neo, 70 A321neo, 34 A350-1000, and six A350-900 models, will be purchased by Air India.
Moreover, Boeing will sell 190 Boeing MAX aircraft, 20 Dreamliners (787-9), and 10 777-9 aircraft to Air India. Both the 220 Boeing aircraft and the 250 Airbus aircraft are solid orders.
In addition to the definitive order, Air India has the option to purchase an additional 70 Boeing aircraft, including 20 Dreamliners and 50 MAX aircraft. The number of planes ordered by Boeing would increase to 290 if the option is exercised.
In addition to placing an order for aircraft, Air India has also reached an agreement with GE Aerospace for the largest LEAP engine order, totaling more than 800 LEAP engines, to power its 400 orders for single-aisle Airbus and Boeing aircraft.
Additionally, GE Aerospace has a multiyear engine service agreement with respect to 20 Boeing 787 and 10 Boeing 777X aircraft, as well as an order for 40 GEnx-1B and 20 GE9X engines.
The only Indian airline to have ordered the Trent XWB-97, which is also the highest order ever for the engine that solely powers the Airbus A350-1000, is Air India, which also inked a memorandum of understanding for 68 of the engines.
Moreover, Air India placed a significant order for 12 Rolls-Royce Trent XWB-84 engines, the sole engine choice for the Airbus A350-900.
The 140 A320neo, 70 A321neo, and 190 Boeing MAX aircraft that Air India ordered are all narrow-body aircraft.
A narrow-body aircraft, commonly referred to as a single-aisle aircraft, is a considerably smaller aircraft that is frequently used for local and international short-haul travel. A narrow-body plane has a maximum passenger capacity of 300 but can fly as few as 4.
The only cabin found in narrow-body aircraft is typically economy class. However, there may occasionally be more Premium Economy and Business/First Class seats.
Wide-body aircraft include the 20 Boeing Dreamliners (787-9), 34 A350-1000, six A350-900, and ten 777-9 models.
A wide-body aircraft is a larger plane with a much greater capacity for passengers. Although they can occasionally be utilised on shorter trips, wide-body aircraft are nearly always used to perform long-haul and medium-haul flights.
Air India’s order, measured in terms of ticket size, is almost $110 billion, according to Mark Martin, founder and CEO of the aviation consulting business Martin Consulting, based in Dubai.
Why is Tata Air India Airlines purchasing so many aircraft?
Since 2006, Air India has not placed an order for a new aircraft, despite the expansion of every other airline in the nation.
In that year, 111 single-aisle Airbus and twin-aisle Boeing aircraft were ordered by the former Indian Airlines and Air India. Later, the two then-existing government-owned airlines were combined under the Air India name.
Since then, Air India has lost market share in both the domestic and international markets as a result of its choice to not place a new order. Air India needs capacity, which the newly ordered aircraft would provide, in order to reclaim market share and expand its footprint within the nation and beyond.
A portion of the current fleet of Air India and Air India Express jets has to be replaced with more modern models that not only protect the environment but also use 15% less fuel overall.
“The disinvestment-related sceptics of Air India will be silenced by these orders.” Under the administration, its potential was untapped, as “the BBC was informed by Jitendra Bhargava, a former executive director at Air India.”
Yet according to analysts, the carrier will need to quickly modernise its operations, including software systems, maintenance, and human resource capabilities, if it hopes to fully realise its potential and operate fifth-generation aircraft like the A350s.
If they are successful, Mr. Martin added, “they will bring India’s distinctiveness to the world once more, after many years.”
Air India would need to broaden its focus “beyond simply India originating passengers and produce more connecting traffic” nonetheless if it wants to have an impact on the world, Mr. Awtaney added. It would need to optimise its route network for this, and India will also need to upgrade its infrastructure.
India doesn’t yet have the ability to manage a significant increase in passenger traffic, as evidenced by the snaking lines and protracted delays at immigration in Delhi and Mumbai throughout the winter.
But as part of its focus on state-led capital expenditure on infrastructure, the nation is building at least 80 new airports over the next five years.
During the pandemic, the Indian aviation industry experienced a rapid rebound, with domestic traffic increasing by 48.9% year over year, according to government data. According to the most recent figures, more than 122 million Indians flew domestically in December 2022.
According to forecasts from the Centre for Asia Pacific Aviation India (CAPA India), India is also anticipated to play a significant role in driving growth in the global aviation industry, with local carriers placing orders for 1,500–1,700 aircraft over the next two years.
Lastly, bulk discounts are offered for large orders.
How will Air India use these planes for deployment?
The Airbus and Boeing aircraft that Air India has recently ordered are eagerly awaited by the aviation industry worldwide.
Martin claims that the Tata Group will have a difficult time modernising and reorganising Air India’s organisational structure to manage such a complicated fleet.
The A350 is a generation five-plus aircraft, and Martin claimed that in order to introduce such cutting-edge technology into India, the way Air India has been operating up until now will need to undergo a complete shake-up and revamp.
He continued by saying that integrated data management, software systems, IT, skills, processes, and technology will all be part of the redesigned operations.
By integrating all available technology, Tata will become more formidable and prepared to manage the new fleet, according to Martin.
Over 140 aircraft are now in service with Air India, the majority of which are narrow-body models.
For domestic operations, it mostly uses Airbus aircraft, whereas its wide-body fleet, which is used for long-haul international flights, is made up of Boeing aircraft. Air India Express only flies Boeing narrow-body aircraft.
Industry observers anticipate that Air India will permit AIX Connect to continue using Boeing aircraft as the group’s low-cost carrier. The 190 Boeing MAX aircraft will most likely be flown by Air India Express and will largely serve the domestic Indian market.
The combined Vistara and Air India company will serve as the group’s full-service carrier and operate the 140 A320neo and 70 A321neo aircraft. In order to implement its full-service experience in the domestic market, Air India will draw on the knowledge of Vistara, which already manages a fleet of close to 50 Airbus narrow-body aircraft.
Thirty Dreamliners are already in service with Air India, including 27 787-8s and three 787-9s. This makes it possible for the cheap arm to fly Dreamliners.
The 777-9 and A350-1000 cater to various profiles. While the A350-1000 will fly nonstop to North America, the 777-9 might be employed to go to destinations like London, which are constrained in terms of both slots and bilateral agreements.
The Dreamliners, however, will aid in the opening of new routes since they offer the ideal combination of seating and range. When they are ready, Air India can take over these routes.
By the time the final aircraft from this new order arrives, the B787-8 will most likely have begun to leave the fleet.
What role does this order play?
Statements made by French President Emmanuel Macron, British Prime Minister Rishi Sunak, and US President Joseph Biden help explain the beneficial impact this treaty has had. a “landmark deal,” according to Biden.
Natarajan Chandrasekaran, chairman of Tata Sons, the holding company of the Tata Group, had remarked in an online press conference on February 14 that “Air India is not just another airline, it is a national initiative, it holds the ambitions and aspirations of millions of Indians.”
Gina Raimondo, the White House press secretary, said shortly after the Air India-Boeing agreement was revealed: “Today, Air India announced it is purchasing over 200 American-made aircraft. That deal, which will support more than one million jobs across 44 states, is Boeing’s third-largest sale ever. It’s good news for American employees and confirms the close ties between our two countries.
Her remarks come in the midst of a global economic collapse that has resulted in massive layoffs.
“I’m pleased to inform you that, thanks to a historic deal between Air India and Boeing, more than 200 airplanes built in the United States will be purchased. In 44 states, this acquisition will support nearly 1 million American jobs, many of which do not call for a four-year college degree,” “added Biden.
Sunak also praised Air India’s historic orders, claiming they will increase employment and British exports, where the European planemaker designs and manufactures aircraft wings.
“The wings will be created in Filton and put together in Broughton, bringing 450 more manufacturing jobs and more than £100 million in investment to Wales. The powerful Rolls-Royce XWB engines, which are assembled and tested in Derby, are the only ones used to power the huge A350 aircraft “According to a press release from his office.
Announcing that it opens the door for a “new stage in the India-France partnership,” Macron also praised the Air India-Airbus agreement. He congratulated Prime Minister Narendra Modi for demonstrating “confidence in France” and its sector in a letter that said, “The contract that Airbus and Tata Sons inked this morning represents a new chapter in India and France’s strategic alliance.”
India will soon overtake China as the third-largest market in the world for aviation, according to Macron during a videoconference with Modi. During the next 15 years, Modi said, India will require more than 2,000 aircraft, and the “historic declaration will help address this enormous demand.”
With Tata Air India Airlines, the legendary maharaja returns home
“These purchases directly synergize Air India’s fleet with Lufthansa and Singapore Airlines—all members of Star Alliance, the world’s largest global airline alliance,” said aviation analyst Mark Martin. “To me, it appears to be a major strategy to oppose the supremacy of Gulf carriers, for whom Star Alliance has been an ardent foe,” said one observer.
Indian travellers today rely significantly on Middle Eastern carriers like Emirates, Qatar Airlines, Etihad, and others for international flights to the US, Europe, and other regions of the world. Once Air India’s new aircraft is placed into service, Mr. Martin thinks that could change.
Air India will be able to immediately enter markets like the US and Australia through the purchase of wide-bodied aircraft like the A350s, thanks to nonstop flights between these locations and India. These are profitable routes to serve the significant Indian diaspora that is present abroad.
Yet given their “loyal following” and capacity to start price wars, breaking the monopoly of the Gulf carriers won’t be simple, according to Ajay Awtaney, proprietor of LiveFromALounge.com, an aviation website with an emphasis on India.
Consumer complaints about Air India’s poorly maintained cabins, malfunctioning charging stations, and defective entertainment systems have dogged the airline for years. Although the new fleet will provide clients with an “improved experience,” Mr. Awtaney claims that there is still a need for qualified employees and human resources.
Air India was regarded as the industry leader in customer service for many years after it was established by the Tatas and before it was nationalised by the government in the 1950s.
However, following years of poor management under succeeding administrations, a growing debt load, and unsuccessful attempts to regain its former glory, Air India was returned to the Tatas in a $2.4 billion (£1.98 billion) deal in 2021, marking the airline’s return to its original owners after 68 years.
1. Which Indian airlines did Tata purchase?
India’s national airline has historically been Air India, a company wholly owned by Tata Sons. On January 27, 2022, 100% of Air India was purchased by Tata Sons through Talace Private Limited (“Talace”), a wholly owned subsidiary.
2. What is the new name of Air India under Tata?
With a goal to complete the process by March 2024, subject to regulatory permissions, Tata Sons and Singapore Airlines (SIA) announced on Tuesday that they will combine Vistara into Air India.
4. Will Tata merge Vistara with Air India?
The merger of Air India and Vistara was announced by Singapore Airlines and Tata Group on November 29. Singapore Airlines would own 25.1% of the new company. By March 2024, the merger is anticipated to be complete. Tata Group and Singapore Airlines have a 51:49 joint venture in the form of Vistara.
5. Which 3 airlines are owned by Tata?
Airlines such as Vistara, AirAsia India, Air India, and Air India Express are owned by Tata Sons.
6. Is Tata Air India running?
A little over a year has passed since the Tata Group was officially announced as Air India’s new owner, bringing an almost two-year process to a close.