A FLEET FIT FOR THE MAHARAJA

A year since it bought the beleaguered state-owned carrier Air India, the salt to-software Tata Group has taken the first major step to script the airline’s revival.

- M.G. Arun

In what is claimed to be the biggest aircraft purchase in aviation history, Air India will buy 470 new planes from Airbus and Boeing for an estimated $70 billion (Rs 5.8 lakh crore), based on the listed prices of the various aircraft it has set its eyes on. Large orders in aviation normally attract hefty discounts, so the final price could vary. As Air India prepares to take on market leader IndiGo, experts say the latter too is likely to reactivate its pre-Covid plans for buying 300 aircraft. All this ambitious taxiing on the runway also comes against a forbidding backdrop: airlines expect a turbulent year ahead because of high fuel prices, geopolitical tensions and recessionary trends in some parts of the globe.

Apart from the 470 firm orders, Air India has an option to buy another 70 aircraft from Boeing in future, taking the total number of aircraft in the new deals to 540. According to Bloomberg, the previous single-largest jet order was a 460-plane deal by American Airlines in 2011. Air India has not revealed how it proposes to fund the deal. However, airlines the world over follow the sale and leaseback model, where an airline acquires the aircraft at an attractive price and sells them to a lessor—ideally at a profit—and leases it back for its own use. This method will be followed at Air India too.