Air India to purchase aircraft through three buying options
Air India plans to finance its mega aircraft order through a combination of three options—using cash flow, equity by parent Tata Group, and sale and leaseback—over the next few years, the airline’s Chief Executive Officer Campbell Wilson said. The aircraft order, which includes a form order for 470 planes from Airbus and Boeing and another […]
Air India plans to finance its mega aircraft order through a combination of three options—using cash flow, equity by parent Tata Group, and sale and leaseback—over the next few years, the airline’s Chief Executive Officer Campbell Wilson said.
The aircraft order, which includes a form order for 470 planes from Airbus and Boeing and another 370 purchase options from the two manufacturers, is the largest aircraft order in one go in the history of commercial aviation.
Air India “can and will” use the available funding sources to pay for the planes, which will be delivered to the airline over a number of years, Wilson told reporters, adding that at list prices, the firm order would be worth $70 billion. He did not give details of the actual order size. Usually, manufacturers offer heavy discounts to airlines when they place large orders.
Apart from the order for new aircraft, the Tata Group airline is already in the process of leasing 36 planes, two of which have already joined its fleet. It is also in the process of restoring some of its grounded planes to service and refurbishing its existing fleet, particularly the wide-body planes that are used for long-haul and ultra-long-haul flights.
Wilson said that the objective is to make Air India a major player in all major market segments—domestic, short-haul international, and long-haul international.
In the international market, Wilson identified North America, Europe, East Asia, and South-West Pacific as strong opportunities for Air India. Underscoring the opportunity for growth in international operations, he said that in all, there are less than 50 operational wide-body planes in India, while many countries much smaller in size have a lot more. He said there is significant demand for long-haul travel from India and Air India wants to serve that demand, adding the Air India order would also help in the journey of making India an international transit hub.
The current combined fleet size of Air India and Air India Express is estimated at 140 planes, with the majority being narrow-body aircraft. Along with Vistara and AirAsia India, Tata group airlines currently have a combined operational fleet of around 220 aircraft. Of the 470 planes ordered Air India, 70 are wide-body planes while 400 are single-aisle aircraft. Air India expects to take delivery of 31 of the ordered aircraft this year itself.
Ever since Air India returned to the Tata Group a little over a year ago, the new owners have been focused on sprucing up the product offering, while also planning an extensive expansion for the airline. A five-year roadmap, Vihaan.AI, was prepared with the objective of substantially growing the airline’s network and fleet in a bid to put it on a “path to sustained growth, profitability, and market leadership”.Wilson described the programme as “probably the greatest transformation in aviation history”.
