Air India’s Airbus, Boeing Order – The Details and its Significance

Table of Contents☰

What’s in today’s article?

Why in News?
Details of the Air India Order
Global Significance of Air India Order
About Indian Aviation Industry
Government Initiatives for Aviation Sector

Why in News?

The Supreme Court issued notices to the Centre and five states — Rajasthan, Uttarakhand, Madhya Pradesh, Uttar Pradesh, and Jharkhand — over the failure to elect a Deputy Speaker.

Details of the Air India Order

Air India’s current fleet is estimated at 140-aircrafts, with the majority being narrow-body planes.
Currently, Air India largely depends on Airbus planes for domestic operations, while its wide-body fleet comprises Boeing aircraft.
As part of the new deal, Air India will get 250 Airbus planes — 210 single-aisle A320neos and 40 widebody A350s.
Meanwhile, it will get 220 Boeing aircraft, — 190 of its 737 MAX narrowbody jets, 20 787 wide-bodies and 10 777Xs.
- The Boeing order includes an option for an addition 70-planes, taking the possible order size to 540 aircrafts.
As per the timelines laid out by the company, the first new aircraft will enter service in late 2023, with the bulk expected to arrive from mid-2025 onwards.
The order value is estimated between $70 billion and $80 billion.
However, manufacturers usually offer heavy discounts on such large orders, so the actual deal size is likely to be considerably smaller.

Global Significance of Air India Order

The significance of the order goes far beyond Air India and India’s aviation sector.
This was underscored by the lead taken by global leaders Prime Minister Narendra Modi, French President Emmanuel Macron, and US President Joe Biden in making the announcement.
The US President said that the deal will generate “over one million jobs across 44 [US] states”.
- The Airbus (US) deal means big business for engine maker Rolls-Royce, and will create jobs in the UK where parts of the aircraft are expected to be manufactured.
Major Western economies are in the midst of an economic slowdown, and are looking to spur economic activity and support employment.
The fact that the announcement has come in the year of India’s G20 Presidency adds strategic value to the order.

About Indian Aviation Industry

India is currently the 7^th largest civil aviation market in the world and is expected to become the 3^rd largest civil aviation market within the next 10 years.
Further, the rising demand in the sector has pushed the number of airplanes operating in the sector. The number of airplanes is expected to reach 1,100 planes by 2027.
India’s passenger traffic stood at approximately 15 crore in FY 2022-23 (April-September 2022).
Indigo Airlines is the largest airline company in India with the highest (55%) market share.
Key Investments –
The government has allowed 100% FDI under the automatic route in scheduled air transport service, regional air transport service and domestic scheduled passenger airline.
FDI inflow in India’s air transport sector (including air freight) reached USD 3.56 billion between April 2000-June 2022.
India aims to have 220 new airports by 2025.

Government Initiatives for Aviation Sector

In the Union Budget 2022-23 –
- More than Rs. 10,000 crore has been allocated to the Ministry of Civil Aviation.
- The RCS (Regional Connectivity Scheme) UDAN Scheme which aims to stimulate regional air connectivity has been allocated approx. Rs 600 crore.
Krishi UDAN 2.0 Scheme –
- Ministry of Civil Aviation launched the Krishi UDAN 2.0 scheme in 2021.
- The scheme proposes assistance and incentive for movement of agri-produce by air transportation.
The Krishi UDAN 2.0 will be implemented at 53 airports across the country, largely focusing on Northeast and tribal regions, and is expected to benefit farmers, freight forwarders and airlines.

Q1) Who controls all airports in India?

Airports Authority of India (AAI) was constituted by an Act of Parliament and came into being on 1st April 1995 by merging erstwhile National Airports Authority and International Airports Authority of India.