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India's mega order reveals a major Airbus weakness

Speculations about an approaching mega-order have been circulating in the industry since last summer.

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India's mega order reveals a major Airbus weakness

Speculations about an approaching mega-order have been circulating in the industry since last summer. Natarajan Chandrasekaran, head of India's Tata Group, made the matter official on Tuesday. A year after taking over the loss-making Air India, the Indian presented his new subsidiary with almost 500 brand-new commercial aircraft with a combined list price of over 100 billion euros. It's one of the biggest deals in aviation history.

With the large order for aircraft from Europe and the USA, India wants to bring domestic aviation back into play. After China experienced a sharp increase in air traffic in recent years due to industrial growth and an emerging middle class, India is now considered the new future market for the industry, but the former state airline was able to benefit little from it.

Instead, the large Gulf airlines Emirates and Qatar captured more and more market shares and transported passengers to America or Europe via their hubs in Dubai and Doha. Now the Indians are countering this and want to build up a growing aviation industry on the ground in addition to a strengthened national airline.

The first beneficiaries of the development are the aircraft manufacturers Airbus and Boeing, who split the mega deal among themselves. The Europeans, who are delivering 250 jets to India, are in the lead – as in most cases recently. Accordingly, Airbus will deliver 140 A320 and 70 A321 jets. There are also 40 A350 long-haul aircraft.

The fact that Air India chose this aircraft as its "intercontinental flagship" shows that Airbus currently offers the most modern wide-bodied aircraft for intercontinental connections, said Sales Director Christian Scheerer. After the deal was announced, the Airbus manager was enthusiastic about the ambitious plans of the new Air India owner in a video conference. "It's a great deal with a great airline and a very great shareholder."

Later in the day, Boeing also announced that Air India had ordered 190 737 family aircraft and 20 long-haul Dreamliners from the US aircraft manufacturer. Options have also been signed to add a further 70 aircraft to the order at a later date.

Airbus already has a very broad footprint in India, Scheerer said, referring to a development center in Bangalore that will grow to 4,500 engineers by 2025. Aircraft components are sourced from India for around one billion euros a year.

The expected growth is gigantic. India is about to overtake China as the most populous country in the world. Only a very small proportion of the population still flies, but it is expected that this will change, as it did in the reference market China. Before the pandemic, domestic flights in India tripled in a decade and international flights at least doubled.

"India's growth rates in air traffic are the highest in the world," says Scheerer. "This contract is just the beginning of a wave of demand from India that will accompany us over the next few years." According to Scheerer, India could purchase "2,500 to 3,000 new aircraft" over the next twenty years.

However, someone has to build the jets. Airbus recently had to struggle with serious delivery problems, especially with the A320 family. Air India joins a long queue here that Airbus first has to work through. With the exception of perhaps one-offs, the Indians will only get their chance “late in the decade” with their bulk orders for aircraft with aisles, Scheerer confirmed.

Things are looking a little better with the "flagships" of the A350-1000 type, which are to be delivered to Air India from the turn of the year 2024/2025. The first large-capacity jets are even scheduled to start their journey at the end of this year. Six aircraft originally destined for Russia's Aeroflot are effectively left over due to the embargo. Now they go to the Indians.

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