The new jets will help Air India to compete against all economy airlines in domestic market including the market leader IndiGo. With the increased fleet it will race to tap surging demand for increasingly affordable air travel to the ever growing middle-class consumers.  As per Air India chairperson N Chandrasekaran Air India is on a large transformation journey and this order is an important step in realising Air India’s ambition – to offer a world-class proposition serving global travellers with an Indian heart. 

This will strengthen the India US and India UK economic partnership. US President Mr. Biden and Indian Prime Minister Mr. Narendra Modi welcomed the landmark agreement between Air India and Boeing as a shining example of mutually beneficial cooperation. This purchase will support over 1 million American jobs across 44 states and will also create huge job opportunities In India and lead to huge infrastructure development.   British prime minister Rishi Sunak said it was one of the biggest export deals to India in decades and a huge win for the UK’s aerospace sector.  French President Emmanuel Macron said the agreement marks a new stage in India and France’s strategic partnership.

This huge order demonstrates the appetite for growth in the Indian aviation industry.  Currently, around 470 commercial aircraft of Airbus are in service in India.   With the latest order from Air India, the total order book of Airbus for India will be around 850 planes.  The fastest growing market, India is going to be the world’s third-largest market in the aviation sector with estimated demand of 2000 aircrafts over the next 15 years.  This would significantly improve India’s image as emerging leader in the commercial aviation sector on the global platform.  The fast-growing economy, surplus income at the disposal of the middle class, the highly competitive economy airlines increasing their footprints to tier II and III cities, has propelled the demand for air travel in India and other Asian countries. 

Air India currently own 219 aircraft – 113 of which are operated under Air India.   With this increased fleet, Air India intends to recapture major share of international traffic dominated by rival international airlines.  Air India has to do lot of catching up in their Asia regional international and domestic services with their competitors by expanding their services to tier II and tier III cities and sustain their position in regional international routes being breached by domestic carriers.  TATA is in the process of integrating Air India with Vistara and Air Asia India.  This will create bigger full-service carrier and will close the gap substantially between Air India and indigo in market share.   It can optimise its route network and resource utilisation, be flexible and agile in capturing demand across market segments and tap on a larger consumer base to strengthen its loyalty programme.  The fleet of new aircraft will modernise the carrier’s fleet and onboard product while dramatically expanding its global network.

Keeping the recent turbulence in China market, it is important for the industry as India has emerged as the alternative growth market. India has also sent a strong political signal that it wants to remain attached to the West.

Growth trajectory of aviation industry: At present there are 700 aircrafts in use by an Indian carrier on domestic and international routes. This present strength will be quadrupled to nearly 3000 in the next two decades to keep up with every growing demand. Passenger growth rate of nearly 7% annually till 2041 is expected to outpace global growth. More than 80% of new airplane deliveries to this market will be for growth, while 20% of new airplanes will be for replacement of aging jets. The Indian market has made a significant recovery and its domestic capacity has exceeded 2019 levels and the domestic traffic is expected to double by the end of this decade.

Besides these bulk order by Air India, IndiGo, India’s biggest carrier by market share is awaiting deliveries of more than 500 aircraft.  Vistara and Akasa Air are also expecting deliveries of around 70 airplanes over the next few years.  India cargo market is also expected to expand over the next two decades to meet demand with fleet to grow from about 15 airplanes today to about 80 airplanes by 2041.

In the Financial year 2022, the domestic market share of the leading India airlines stood as follows:

Indigo          : 55.4%
Spicejet       : 10.0%
Air India      : 9.7%
Go Air          : 9.5%
Vistara         : 8%
Air Asia        : 5.7%

Meanwhile, Jet Airways is on the verge of relaunching after having ceased operations in 2019 following bankruptcy and being bought by the Jalan Kalrock Consortium.  Akasa Air has launched its commercial operation in 2022. The new low-cost airline, expects to be carrying out 250 flights per week.  

In 2019, 200 million passengers travelled by air in India which is negligible compared to its huge population of over 1.3 billion.  As per Mr Jyotiraditya Scindia, Civil Aviation Minister of India, it is expected that passenger numbers will double to 400 million within the next four years. This industry has witnessed a transformation in the last eight years in terms of affordability, accessibility and inclusion as never seen before. Indian civil aviation industry has expanded to become the third largest in the world. It is anticipated that by 2024, India’s domestic aviation market will rank third internationally, contributing $ 30 Bn yearly to Gross Domestic Product (GDP). The Indian Government, under the `Ude Desh Ka Aam Nagrik’ (UDAN) has pledged to build 100 additional airports by 2024. Indian government intends to spend $ 1.83 Bn on expanding airport infrastructure and aviation navigation services by 2026.  Several foreign aviation corporations have invested in the subcontinent’s aviation market due to the rapid economic transformation in India’s aviation industry.

The Indian civil aviation, maintenance, repair and operations (MRO) market is currently worth around $ 900 millions which is projected to increase at a Compound Annual Growth Rate (CAGR) of roughly 14– 15 per cent to $ 4.33 Bn by 2025.  India’s MRO facilities need to gear up tremendously in size to take care of the growing number of airports and aircrafts in the nation.  Tirupati Airport is identified to be the MRO hub.  The MRO facility is to be provided on a design, build, operate, maintain and transfer basis.

The Indian civil aviation, maintenance, repair and operations (MRO) market is currently worth around $ 900 millions which is projected to increase at a Compound Annual Growth Rate (CAGR) of roughly 14– 15 per cent to $ 4.33 Bn by 2025.  India’s MRO facilities need to gear up tremendously in size to take care of the growing number of airports and aircrafts in the nation.  Tirupati Airport is identified to be the MRO hub.  The MRO facility is to be provided on a design, build, operate, maintain and transfer basis.