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19. December 2022

Air India on the verge of rebirth

For years, 1932-founded Air India (IATA: AI) was considered a flying corpse in aviation circles. Yet, the vultures did not prey because the state prolonged the life of the notoriously unpunctual and little service-minded airline, by constantly channeling in new funds. On 27JAN22, however, the Tata Group took over the carrier, partnering with Singapore Airlines which bought a 25.1% stake at the end of NOV22. Thanks to the change of ownership, Air India’s future looks more promising, as demonstrated by an intended massive order of new aircraft.

The entrance of the carrier’s administrative headquarters at Airline House on Gurudwara Rakabganj Road, not far from New Delhi airport, resembles a revolving door. One manager leaves the building, another steps in. Both apparently with the same goal: to sell aircraft, as many as possible.
The prospects are good since the airline intends to place a mega order. Local media speak of up to 500 jetliners - a mix consisting of 400 narrowbodies and 100 widebodies. In the case of the latter, Airbus A350s and the two Boeing variants B787 and B777 are said to be on the airline's shopping list.

Currently, Air India operates 27 B787-800; it could be much more in future – credit: AI
Currently, Air India operates 27 B787-800; it could be much more in future – credit: AI

Rare B787 production slots
It would be a huge deal for Boeing or Airbus. Probably for both. The total package is likely to exceed US$100 billion. Due to the large volume, it is expected that it will be a mixed order, pleasing both manufacturers. Anything else is hardly feasible for slot reasons. After all, the entire order would block production capacity for more than 9 months, pushing contracts signed by other Boeing or Airbus clients on the backburner. Presumably, much to the dislike of United Airlines which announced a firm order for 100 B787s on 13DEC22, with options to purchase 100 more. Hence, latecomers such as presumably Air India, will have to wait in line for a “Dreamliner” production slot. This further ups the number of open orders for the long-haul aircraft. Meanwhile, 470 Dreamliners (B87-8, -9, and -10) are pending delivery, partly due to the production stoppage in 2020 caused by technical problems. Now United's order has additionally filled the list.

Nonstop beats indirect flights
Although details of the planned orders are still nebulous, CEO Campbell Wilson has confirmed to agencies that Air India plans to “greatly expand its fleet over the next five years at an investment that will be substantial.” Local market observers believe that freighters are also on the airline's purchasing list. This is reasonable since competition with Gulf Airlines is likely to increase as the fleet grows. Currently, Etihad, Emirates, Turkish Airlines, or Qatar Airways transport the bulk of imports and exports to/from India on their own fleets. However, all shipments need to be transited at Dubai, Abu Dhabi, Istanbul, or Doha Airport before continuing the journey to their final destination. This is time-consuming compared to the nonstop flights that Air India will be able to offer the market with its future long-haul fleet.

Two-way cargo traffic
On domestic routes, the company is only one of many operators, with a market share of 10%. The Indian market is dominated by low-cost airlines such as IndiGo (49%), and SpiceJet (15%). Therefore, the management is focusing on the long-haul business, especially to the UK, where there is a large Indian community. Also from the cargo perspective, intercontinental flights are highly interesting, since it is a two-way traffic with exports and imports nearly matching. So far, however, none of the carrier’s leased or owned 49 widebody aircraft is a freighter.
According to the data portal Statista, medical and pharmaceutical products accounted for 5.4% of all Indian exports in 2021, chemical products for 5.15%, followed by automotive (4.45%) and clothing (4.16%). Concerning imports, many of these goods travel by air: machinery parts, medical instruments, aircraft equipment, tools, but also high value commodities such as gold and diamonds.

Tata becomes a major player in civil aviation
Prior to confirming the major order, Tata announced the merger of Air India with Vistara, a joint venture with Singapore Airlines, to create a bigger, full-service carrier and strengthen its presence in domestic and international markets.
That deal gives Tata a total fleet of 218 aircraft, cementing Air India as the country's largest international carrier and second largest domestic airline after leader, IndiGo. The purchase of debt-ridden Air India has also given Tata access to valuable flying rights and landing slots, especially to destinations in Europe and the United States.

Heiner Siegmund
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Comments: 1
  • #1

    Rayhan ahmed (Monday, 19 December 2022 19:02)

    I was ramp handling air India at
    Heathrow in 2002 -2004 with there
    B747 -400 then 2010 to approx 2013
    B777 200 and I think as I fairly remember
    If I am right the 300ER .
    Air India Is prone to change there ground
    Handler like the say of a word same with
    Terminals . They have been handled by
    Every ground handler at Heathrow and
    Operated in ever terminal at Heathrow
    2 , 3 , 4. They have mind you there own
    Engineering at Heathrow instead of
    a third party engineering and prone
    Visits by CAA flight safety inspectors.
    I do not believe they have a plan to
    Expand they airline is in a loss and is
    Always given life by the Indian govt . As
    For new aircraft it’s never going to happen
    They decide to replace there ageing
    B787 - 900 by the A350 -900 or 1000 .

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