A rejuvenated Air India (AI), which has been under the ownership of Tata Sons since January, is nearing a mega aircraft order for approximately 500 jetliners, according to Reuters.
AI is likely to order about 400 single-aisle jetliners and 100 twin-aisle aircraft, the Reuters article, quoting industry sources said. It added that the orders could include Airbus A350s and Boeing 787/777 twin-aisle jetliners, and the whole deal would be worth $100 billion at current list prices. However, the order numbers could include firm orders and options, i.e., the number of aircraft ordered may be lower as the options are exercised at a future date.
In June, the Times of India reported that AI was looking to acquire 50 A350s and over 100 A320neo family jetliners. In recent months AI has also announced the lease of single-aisle and twin-aisle jetliners.
The orders are being split to ensure that AI can receive its new aircraft as soon as possible. Airbus, for example, has A350 jetliners which cannot be delivered to Russian customers and could be shifted to AI. Airbus offers the A350 in two versions, the A350-900 and the larger A350-1000. Singapore International Airlines (SIA), which will own 25.1% of the larger Air India group, is also the world’s largest A350 operator. SIA has over 58 aircraft in service and seven A350F freighters on order.
The formal announcement of a large aircraft order will strongly display Tata Sons' intent to grow AI’s market share. AI has already announced direct flights between Indian cities and key global destinations like Doha, San Francisco, Vancouver, and Birmingham. The carrier is also slated to commence direct flights from Delhi to key European cities like Milan, Vienna and Copenhagen and from Mumbai to New York, Paris and Frankfurt.
AI already has substantial in-house engineering and technical expertise on the B777/B787 and MRO infrastructure. Hence additional orders for these aircraft will allow them to gain greater economies of scale. The airline has traditionally been a Boeing customer for its widebody fleet, starting with the B707 in 1960 and B747-100s in 1967, followed by deliveries of 747-200 in 1971, 747-300 in 1988 and 747-400 in 1993. In 2005, it placed orders with Boeing for 27 B787s, 15 B777-300ERs, eight B777-200 LRs and 18 B737-800s. Two of AI’s B777-300ERs are now operated by the Indian Air Force (IAF) and are exclusively reserved for VVIP Government travel.
Single-Aisle Surprise
AI is also nearing a deal with Boeing to acquire up to 150 B737 MAX jetliners, the Economic Times reported quoting unnamed sources. It said that AI was likely to place a firm order for 50 single-aisle jetliners, with options for 100 more. The decision to proceed with the 737 MAX appears to have resulted from Boeing’s ability to offer AI early deliveries of aircraft which were earlier destined for Chinese carriers.
While AI operates Airbus A320 family single-aisle jetliners on domestic routes, sister carrier Air India Express (AIXL) is a Boeing-only operator with a B737- 800 NG fleet, which it operates to international destinations. It is unclear, as of now, whether the 737 MAXs are destined for AI or AIXL.
Boeing has been seeking to de-risk itself from the situation regarding 737 MAX deliveries to Chinese carriers. Stanley Deal, Executive Vice President, President & CE0 -Boeing Commercial Airplanes, during Boeing’s Investor Day in November, said, “I have not gotten a single signal, and I'm surprised by it, that they're going to take deliveries in the near term,”
Boeing delivered 88 MAX jetliners to customers in its third quarter this year and estimated that it will end the year with deliveries of 375 single-aisle jetliners. Boeing also ended its third quarter with 270 MAX airplanes in inventory.
At the Investor Day call, Brian West, CFO & Executive Vice President-Finance, Boeing, said, “Of the inventoried airplanes, 138 are for customers in China. We continue to explore options to remarket some of these airplanes as we de-risk our near-term delivery plan. Based on the latest assessment of China, and the dash-7, and dash-10 certification timelines, we now expect most of the inventoried airplanes to deliver in 2023 and 2024 with some moving into 2025.” As on September 30, 2022, Boeing had an order backlog for 3,510 737 MAX airplanes.
Back In Service
The 737 MAX fleet returned to service in August 2021, following a worldwide grounding of the type after two fatal accidents in October 2018 and March 2019 involving Lion Air and Ethiopian Airlines, respectively. At present, 806 of these jetliners are flying worldwide and have completed over a million revenue flights and more than 2.5 million flight hours since the accidents. The dispatch reliability of the 737 MAX fleet at 99.5% is now higher than the current B737 NG fleet. Commenting on the 737-10, which is the largest member of the MAX family, with the ability to seat between 188-204 passengers, Deal said, “On the MAX 10, we'll continue to work with the FAA, and we anticipate the closure of certification by late 2023 or early 2024.”
Hiring Spree
The induction of such a large number of state-of-the-art jetliners is unlikely to pose any major problems for AI, which is rapidly inducting additional pilots and crew to staff its growing jetliner fleet and has always had an excellent engineering team to handle the maintenance of these aircraft. However, it will need to ensure that it can recruit the crew to match the pace of induction and operationalisation of its new aircraft.
Early in December, AI graduated its first batch of cabin crew trainees and a significant batch of pilots since its privatisation. The airline graduated 215 cabin crew and 48 pilots, who were all Indian nationals. The cabin crew training programmes were conducted at the airline’s training facility in Mumbai, while the new pilots, comprising 40 men and eight women, completed their training at AI’s Hyderabad training campus. These pilots will operate AI’s A320 family aircraft. About 59 new pilots are also in various stages of training to support AI’s ambitious growth plan.
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