India’s leading carrier, IndiGo, stole the show on Day 1 of the Paris Airshow 2023 with a firm order of 500 A320 family aircrafts from Airbus. At list prices, the IndiGo order is worth approximately US$50 billion though airlines typically secure large discounts for such sizable deals.
This is the largest single purchase agreement in commercial aviation history. IndiGo has now placed total orders with Airbus for 1330 aircraft and is also the world’s largest customer for Airbus’ single-aisle jetliner family. Prior to this, IndiGo had ordered 830 A320neo family jetliners from Airbus with 480 yet to be delivered.
“The engine selection for this order will be done in due course and so will be the exact mix of A320 and A321 aircraft,” IndiGo said in a release. Pieter Elbers, CEO of Indigo, said it was difficult to overstate the significance of this moment.
An order book now of almost 1,000 aircraft well into the next decade will allow the airline to fulfil its mission of boosting economic growth, social cohesion and mobility in India. “This order strongly reaffirms IndiGo’s belief in the growth of India, in the A320 family and in our strategic partnership with Airbus,” he added.
This order also overshadows Air India’s of 470 aircraft with Airbus and Boeing finalysed at Le Bourget, which is, however, larger in terms of value as it includes single-aisle and twin-aisle jetliners. IndiGo is also reportedly close to announcing a deal for purchase of widebody twin-aisle jetliners from either Airbus or Boeing for 25 aircraft. These will be used for expansion of its international routes.
Present at the inking of the purchase agreement between IndiGo and Airbus was Rahul Bhatia, Promoter & Managing Director of IndiGo, Dr. Venkataramani Sumantran, Chairman and Non-Executive Independent Director of IndiGo, Pieter Elbers, Guillaume Faury, Airbus CEO, and Christian Scherer, Airbus Chief Commercial Officer and Head of International.
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In Growth Mode
IndiGo will now have a steady stream of deliveries from this order between 2030 and 2035. “This landmark order marks a new chapter in Airbus and IndiGo’s relationship. It is also a resounding endorsement of the A320 family’s best-in-class operating economics that have been powering IndiGo’s growth for almost two decades,” Scherer said.
“The A320 family has been instrumental in democratising air travel in India with its best-in-class operating economics. This has enabled our airline partners to add millions of first-time flyers to a booming aviation market,” said Rémi Maillard President & Managing Director, Airbus India & South Asia.
It would be safe to assume that in the backdrop of Pratt & Whitney’s continued travails with its troubled geared turbofan (GTF) engines, IndiGo will opt for CFM International’s LEAP engine.
Aviation consultancy advisory practice, CAPA India, had predicted in February that IndiGo had been planning to place a significant order of around 300 aircraft prior to COVID which was deferred due to the pandemic. “This is now likely to proceed and could be even larger than previously envisaged, increasing to around 500 aircraft now,” it had stated then.
CAPA India’s proprietary traffic forecasts for the next decade and beyond — combined with its assessment of aircraft retirement cycles — indicate that Indian carriers could place orders for around 1500-1700 aircraft over the next 24+ months. At present, IndiGo and Air India have now announced orders for 970 aircraft.
CAPA India however cautions that even after supply-side challenges are resolved, aircraft and engine OEMs face a significant backlog of orders that could take years to address. “Airbus and Boeing combined had 12,669 unfulfilled orders as at December 31, 2022. Delivery slots are very hard to come by for at least the next couple of years, while for narrow-bodies the situation is reportedly tight until 2029,” it adds.
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Giant in the Making
Indian aviation has grown at an impressive (passenger) CAGR of around 13% in the seven years pre-COVID but the country still remains largely underserved in terms of both domestic and international air travel. IndiGo will be targeting a massive expansion of the destinations it serves with the induction of these new aircraft.
This will also allow the airline to maintain a young fleet age, which is 3.5 years right now, and among the lowest CO2 emitters worldwide. “The young and fuel-efficient fleet will help IndiGo realise its sustainability ambitions, building on the already realised CO2 reduction of 21% between FY16 and FY23,” the airline said in a release.
IndiGo’s long-term direction is being guided by its three strategic pillars of reassure, develop and create. The initiatives are intended to serve around 100 million passengers this fiscal, as compared to 86 million in FY 2023. IndiGo is also expanding its freighter fleet of two aircraft with an additional one expected later this year.
The airline has a domestic market share of over 60% dwarfing the likes of Air India, SpiceJet and Go First. It is planning to induct between 40-50 new aircraft this fiscal. Following its first aircraft order with Airbus for 100 A320ceo family jetliners in 2005, IndiGo has placed orders every four years: 2011, 2015, 2019 and now in 2023. While the 2011 order was for 180 A320 family, including the neo (new engine option), 250neo family were ordered in 2014 and 300 A320neo family in 2019.
IndiGo took delivery of its first A320neo family jetliner from Airbus in March 2016 and today operates one of the world’s largest fleets of 162 A320neo, 79 A321neo along with 21 A320ceo and 2 A321 freighters.