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The world’s two largest planemakers have announced record-breaking contracts driven by rising demand from regional airlines in India, signaling a possible resurgence of a commercial airline industry battered by years of coronavirus-induced malaise.
In an announcement Tuesday at the Paris Air Show in Le Bourget, France, Boeing said it had completed an order for up to 220 commercial jets for the fast-growing Air India, with options for an additional 70 planes. The same airline signed a previous deal for 250 jets from Airbus, Boeing’s European rival.
Just a day earlier, the Indian low-cost airline IndiGo had placed a firm order for 500 Airbus A320 passenger aircraft. On paper, at least, this is the largest deal in commercial aviation history.
Air India CEO Campbell Wilson said the major order will enable Air India “to operate the most advanced and fuel-efficient aircraft” within five years and would strengthen India’s position on the global stage. The deals were first announced by Air India in February but were officially announced this week.
“We are proud to work with all our partners, including Airbus, on this journey to rebuild a global airline that shows India is taking a more confident stance globally,” said Wilson.
The Airbus Chief Commercial Officer called Air India’s expansion “one of the most ambitious projects in the aviation business today”. Stan Deal, Boeing CEO, said the deal “shows [Air India’s] Confidence in our products and services in the fastest growing aviation market in the world.”
According to Mike Boyd, a commercial aerospace analyst at Boyd Group International, the most attractive jets on the market currently belong to Airbus. But the jet maker is stuck in a “production backlog” and is unable to meet all of Air India’s demand due to backlogs of orders.
“When they saw that Airbus couldn’t meet that demand, they called their friends in Seattle. Boeing is clearly in decline, even with this deal,” Boyd said.
According to Nirmala Sitharaman, India’s finance minister, the Indian government plans to open 100 new airports in the country by 2024, which could double its air fleet from 600 to 1,200 aircraft. The new airports are part of the country’s plan to modernize its transportation infrastructure and make air travel cheap and accessible between a new network of regional airports.
The contract between Air India and Boeing includes 190 737 MAX, 20 787 Dreamliner and 10 777X jets with an option to purchase an additional 50 737 MAX and 20 787 Dreamliner, the company said in a statement. The airline has ordered 210 narrow-body A320neo and A321neo aircraft and 40 wide-body A350 aircraft from Airbus.
At list prices, Air India’s deals with Boeing and Airbus are worth a combined $70 billion, Air India’s Wilson said in February. However, offers of this type are typically discounted by about 25 percent from list prices, Boyd said, although order details are subject to change due to advances in technology and regulation.
The first jets from Airbus’ contract with Air India will be widebody A350s and will be delivered by the end of the year, company spokesman Stefan Schaffrath told the Washington Post. Airbus’ contract with IndiGo calls for a delivery window beginning “in the early 2030s,” Schaffrath said. Boeing declined to announce the delivery window for its deal.
Airbus is producing 65 jets a month and is fully booked with orders through 2029, Schaffrath said. By 2026, the jet manufacturer expects production to increase to 75 jets per month.
Boeing shares fell more than 3 percent on Tuesday.
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