Tata-owned Air India is close to signing a deal with Boeing to acquire up to 50 737 Max jets, said people with knowledge of the matter. This will be Air India's first significant aircraft order following its privatization.
Following a contract with Akasa Air for 75 aircraft last year, this will be Boeing's first significant sale in India. The Airbus A320 dominates India's fleet of narrow-body aircraft. According to the sources, Air India will probably place a firm order for 50 737 Max aircraft with the option to purchase up to 150 additional aircraft.
The order tilted in favour of Boeing as the plane maker was able to guarantee immediate delivery of 50 planes that were earlier intended for China Southern, which was supposed to take delivery of 103 Max planes.
Airbus may bag a part of the order. “Fifty of those aircraft will be delivered to Air India immediately, starting by March next year,” said one of the persons. “Air India is hungry for aircraft as they have an aggressive expansion plan.”
The order is likely to be signed in the next few weeks, the person said. In contrast, Airbus hasn’t been able to promise deliveries of the A320 Neo before 2025. However, Airbus could still win a portion of the narrow body orders from the airline that’s likely to want more than 150 such aircraft.
“Air India is taking advantage of the situation as there are aircraft immediately available with Boeing but Airbus is still in the reckoning for a part of the order and negotiations are on,” said a second person aware of the plans.
A Boeing spokesperson declined to comment on future deals. Air India didn’t respond to queries. Boeing hasn’t been able to deliver 737 Max jets to its Chinese customers as the country’s aviation regulator hasn’t recertified the plane after grounding it in 2019 after two crashes.
A frosty relationship between the US and China has made supplies even more uncertain with Boeing now looking to remarket the aircraft. Since taking over Air India early this year, Tata has engaged with aircraft manufacturers as part of revamping the fleet.
CEO Campbell Wilson said Air India plans to expand its fleet and global network, aiming to increase its market share to 30% on both domestic and international routes over the next five years. Tata Sons is in the midst of consolidating its aviation business.
AirAsia India and Air India Express are being merged into one low-cost unit and Vistara will be absorbed into Air India to create a single full-service airline. While the order will be placed by Air India, the aircraft may also be allocated to its low-cost unit.
Air India Express currently has 24 737 aircraft while AirAsia India operates 28 Airbus A320 jets. The new planes will help enable the airline’s plans to serve short-haul destinations within a four-five hour range as it aims to be a competitor to IndiGo, which currently has more than 50% of the domestic market. Besides ordering new aircraft, the airline is also adding 36 wide-bodied aircraft on short-term leases by 2023.
