The way Air India has given life to Boeing and Airbus. Similarly, western countries should reward India by transferring technology.
The way Air India has given life to Boeing and Airbus. Similarly, western countries should reward India by transferring technology. India is set to give a new lease of life to the global aviation industry with the announcement of plans to buy a record 470 jets from Boeing and Airbus to meet the year-on-year demand from growing domestic air passenger and e-commerce markets. The deal will now bring the country's oldest national carrier under the Tata group into tough competition with rival IndiGo in the domestic market as the aviation industry continues to grow at 7 per cent annually. This aircraft is expected to arrive in the country in the next eight years.
What is the story?
Boeing projections released at the Auto India Expo show that airline operators here will need 2,210 new aircraft by 2041 to meet growing domestic demand as India's affluent middle class continues to expand. These figures of Boeing for India are according to the 2022 Commercial Market Outlook (CMO). According to a report by Center for Aviation, an Australian research and consultancy firm, India will need to order 1500-1700 passenger and cargo aircraft in the next 24 months.
This historic deal of Air India will prove to be a milestone in India's aviation industry. To some extent, this will give enough momentum to the industry, which has been lagging behind due to difficult regulations and slow bureaucracy, to fill the gap so far. This confirms the belief of the government led by Prime Minister Narendra Modi that the disinvestment of Air India will give a new impetus to the domestic civil aviation sector.
Domestic air passenger traffic in India grew by 47 per cent last year alone and is expected to continue to grow in the years to come. But Indian airline companies have negligible number of aircraft compared to the fleet of international airlines. The combined fleet strength of Indian airlines is around 800 aircraft, well below industry capacity and growth projections. American Airlines alone has a fleet of 934 aircraft, followed by Delta Airlines and United Airlines, all US companies.
Indigo, the largest carrier of the world's most populous country in terms of fleet size, is ranked 10th in this list. This deal of India's former national airline Air India will take it to number six, just behind China Southern Airlines. Soon after the Air India deal, Indigo can also order 500 more aircraft soon. Other domestic airlines like Spice Jet, GoFirst and Akasa will also buy new aircraft to attract a larger segment of the growing domestic air passengers.
In recent times, the supply chain has been disrupted due to disruption in global markets due to tensions in the Indo-Pacific region and war in Ukraine. In such a situation, a huge backlog has arisen with the aircraft manufacturers. Airbus and Boeing have 12,669 unfulfilled orders till December 31, 2022. In such a situation, it may take many years for them to meet the increasing demand in India.
Why is this a big deal?
Air India's billion-dollar strategic deal provides a lifeline for America's Boeing and France's Airbus industry. Both the companies have registered a huge decline in demand from the world's largest market. In fact, in December last year, China has launched an indigenous aircraft manufacturing company after nearly ten years of research and development.
The deal, part of a larger effort to make India a $5 trillion economy, has strengthened India's position among western countries. Emmanuel Macron of France termed the deal as a new phase in Indo-French relations and pledged to partner with India in other areas as well. Joe Biden called it a historic agreement and said that it would create more than one million jobs in 44 states of America. Biden said that America is ready to take this partnership further. He said that both countries can continue to face common global challenges.
How can India use the deal?
India can use the deal to implement clean fuel for airlines, which will show its dedication to combating the threat of climate change and global warming. The $150 billion deal is also an example of India's commitment to deepen its strategic partnership with the West. The deal will create hundreds of thousands of jobs in the US, UK and Europe. But this deal should also include the expansion and advancement of research, technology and development in India's aviation and other sectors.
In Biden's words, partners need to share their technological advances with each other to address common global challenges. America and other western countries have so far shown reluctance to do so. How and in what way the Air India deal turns out to be a gamechanger in this regard remains to be seen.
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