Saturday, July 09, 2022

Aircraft Orders from India Set to Drive Global Jet Sales

India’s aviation market has been buzzing with activity ever since the impact of the Covid-19 pandemic waned. The entry of new players, new deals and recovering air traffic are harbingers of the dogfight waiting to take over the Indian skies. Now, it has been reported that Air India and Jet Airways—two major Indian carriers—are looking to place aircraft purchase orders worth more than $45 billion at list prices.

Air India is considering buying 300 narrow-body jets—which would be one of the largest orders in India’s commercial aviation history, say reports. “The order will provide a significant opportunity for Air India to revamp its fleet, and negotiate much better rates with the manufacturers,” says Rohit Tomar, Partner at aviation advisory Caladrius Aero. As the order is big, “it will be delivered over a long period. Maybe seven years from the time of order.”

Some in the industry say that the Air India order could to be a mix of both narrow-body and wide-body jets. On the other hand, Jet Airways, which is yet to decide on the type of aircraft, is in talks with Boeing and Embraer, other than Airbus. “We are in final negotiations with lessors and OEMs for aircraft, and we will announce our fleet plan once we have made a decision,” says a Jet Airways spokesperson. Jet is preparing for its re-launch later this year.

As per data compiled by BT, since 2011 the order book at major Indian scheduled carriers today stands at more than 1,100 aircraft, with deliveries currently underway. These fresh aircraft orders give credence to forecasts by leading aviation advisors that together with China and Southeast Asia, India would be driving passenger jet sales over the next several years.

Such large orders facilitate volume discounts for carriers and help lock in slots at production lines; they also ensure the availability of the right aircraft for deployment. Aircraft orders are also a matter of national importance, as assembly lines at manufacturers like Airbus and Boeing support thousands of jobs. Therefore, the EU and the US are known to buttress sales pitches by these two firms with government-to-government lobbying.

Sustaining a production line for narrow-body or wide-body jets necessitates bulk purchases. For instance IndiGo’s $6-billion order for 100 Airbus narrow-body jets at the 2005 Paris Air Show not only helped provide a new lease of life to the European manufacturer’s A320 assembly line, but also marked the beginning of the end of Boeing’s leadership position in the Indian market. “Boeing may be looking at making an aggressive comeback,” says the CEO of an Indian carrier who declined to be named.

09/07/22 Manish Pant/Business Today

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