Beleaguered Air India recently placed the largest-ever commercial aircraft order and is working to regain its reputation for good service
By guest author Megha Mandavia from the Wall Street Journal.
A turnaround of India’s flag carrier Air India Ltd. could place the country on the global aviation map. The beleaguered airline just kick-started the process with a historic aircraft order.
Last week, Air India ordered 470 jets from aircraft giants Boeing Co. and Airbus, marking the largest deal for commercial aircraft in aviation history. The airline also has an option of ordering an additional 370 planes in the future. The deal comes a year after the government sold the airline back to Tata Group after almost 70 years of public ownership, which were often characterized by mismanagement and financial troubles.
The airline, which was once known for good service, is working hard to regain its reputation and make up for lost time. If the plan works, India might have a fighting chance to become a regional aviation hub, after losing out to Middle Eastern crossroads such as Dubai for years.
Shukor Yusof, founder of aviation consulting firm Endau Analytics, says the deal exponentially raises the importance of India as a price-maker in the post-Covid aviation sector. India isn’t yet nearly as big a market for Boeing and Airbus as China, which Boeing last year forecast could take delivery of over 8,000 passenger jets in the next 20 years. But India’s importance could grow after 2030, according to Mr. Yusof—particularly with China getting closer to delivering its own planes for commercial use. Consulting firm CAPA Advisory expects Indian carriers will order an additional 1,000-1,200 planes in the next year or two, starting with purchases by Air India’s rival, the low-cost domestic carrier Indigo.
Growth numbers are also promising. Monthly air traffic has nearly returned to itsprepandemic peak of 31 million passengers—and is over 50% higher than in 2015, according to figures from data provider CEIC.
Still, the challenges remain enormous: not just in terms of scaling up the airline fleet itself, but building new airports, upgrading the supporting infrastructure, training personnel and addressing structural challenges like pricey jet fuel. India will have to motivate international airlines to fly in and out of India on a much larger scale. And Indian airlines together operate about 700 commercial planes, fewer than some of the largest individual global airlines, according to data from CAPA.
Competing with cash rich Gulf airlines such as Emirates, Qatar Airways and Etihad Airways—or jousting with hubs like Dubai—isn’t going to be easy. And big investments come with their own risks. An economic slowdown in developed economies, a weaker-than-expected reopening in China or a rise in crude oil prices could all derail the current boom in air travel.
The mega order by Air India is a critical milestone for India’s aviation dreams, but the runway is long.