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Air India commits to buying 470 aircraft, largest ever order in aviation history

MUMBAI: Air India, India’s part of the Tata Sons conglomerate has announced that it has signed letters of intent with Airbus and Boeing to acquire 470, both widebody and single-aisle aircraft.

Although the amount involved in the deal has not been announced aviation experts believe that the deal could be valued in the range of US$ 100 billion to US$ 120 billion depending on the specifications and configurations.

Airbus which is based out of Toulouse, France released a communication saying that Air India has announced its commitment to order 250 Airbus aircraft which includes 140 A320 Neo and 70 A321 Neo single-aisle aircraft as well as 34 A350-1000 and six A350-900 wide-body jets. IT also added that deliveries are set to commence with the first A350-900 arriving by late-2023.

Seattle-based American multinational, Boeing also made an announcement that Air India today plans to invest in 190 737 MAX, 20 787 Dreamliner and 10 777X aeroplanes. Boeing also announced that the agreement between Boeing and Air India includes options for 50 additional 737 MAXs and 20 787-9s. "When finalized, this will be the largest Boeing order in South Asia and a historic milestone in the aerospace company's nearly 90-year partnership with the carrier. The order will post to Boeing's Orders and Deliveries website when final," the company said.

Prime Minister Narendra Modi, French President Emmanuel Macron and US President Joe Biden jointly hailed these agreements with the two aircraft producing companies. Macron was the first to tweet on the deal, he wrote, "The contract that Airbus and Tata Sons signed this morning marks a new stage in India and France’s strategic partnership."

The White House also released a statement by Biden on the deal calling the purchase of over 200 American-made aircraft historic. His statement also said that this deal will support over one million American jobs across 44 states and many would not need college degrees for those jobs.

South Asia's market is rapidly growing both for domestic and international air travel and with advancing fleet strength after the eventual addition of the planes, Air India would emerge as the largest domestic airline unless the others also scale up.

Air India as a group operates full-service Air India as well as two low-cost subsidiaries Air India Express and Air Asia which are both in the process of merging. Tata Sons have also recently announced its intention to merge Air India with Vistara, a joint venture (JV)in which it holds 51 per cent shareholding.

According to data released by the regulator Directorate General of Civil Aviation (DGCA) in the last calendar year passenger number have grown by 47.05 per cent. Domestic airlines carried 1,232.45 lakh passengers from January to December 2022, which was up from 838.14 lahks during the year-ago period.

IndiGo continues to be the largest carrier in the country and it flew 69.97 lakh passengers in the month of December 2022, clocking a maximum market share of 54.9 per cent in the country, followed by Air India, which flew 11.71 lakh passengers and capturing a 9.2 per cent market share. The other two Tata Group partnered ventures, Vistara, a JV with Singapore Airlines is the third largest domestic airline, with 11.7 lakh passengers and a 9.2 per cent market share in December 2022 while the market share of Air Asia, another Tata JV was at 7.6 per cent in December.

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