The world’s biggest ever commercial aviation deal has been sealed by Tata Group-owned Air India, by purchasing 470 passenger aircraft from France’s Airbus and American plane-maker Boeing. The record deal boosts India’s position on the global platform as an emerging leader in the commercial aviation sector. It has also put Air India in the league of aspiring global carriers – a much needed move for the country where the aviation sector is growing rapidly.
Air India’s deal for nearly 500 jets shows the intent of the Tata Group to rapidly expand its footprint in the aviation sector and take on both domestic and international rivals.
The record aviation deal came to fruition after months of secret talks carried out near Britain’s Buckingham Palace, reported news agency Reuters after speaking with people involved in the talks. It was only on Tuesday that the confidentiality was lifted as leaders hailed the accord in a diplomatic embrace between leading G20 nations. Though the deal marks a major achievement for the Tata Group, which regained control of Air India only last year, it made a low-key announcement about it.
Negotiators representing Air India, planemakers and engine giants camped out at the Tata-owned hotel and neighbouring suites for several days at a stretch. The goal of all the stakeholders was to expand their footprint in the fast-growing Indian aviation market that has seen many airline growth plans rise and fall.
The deal provided Boeing a chance to restore its position in India’s single-aisle jet market and narrowed Airbus’ massive lead. On the other hand, Airbus wanted a bigger pie of the wide-body market led by its rival. However, the deal was balanced out between both the planemakers.
The negotiations were led by Air India’s chief commercial and transformation officer, Nipun Aggarwal, along with Yogesh Agarwal, head of aircraft operations. The negotiations often stretched into the night, with sellers churning out new “best offers” fuelled by room service.
The negotiations in London ended with a lavish dinner at St James’ Court’s Michelin-starred Indian restaurant, Quilon, which is renowned for its seafood and coastal cuisine from places like Goa and Kerala.
Despite sealing the historic deal, analysts say Air India faces several challenges in its path to becoming a successful aviation company. For starters, it needs better service and efficiency to make a serious dent in the powerfully entrenched hubs of Doha and Dubai.
At the same time, India’s potential as a fast-growing airline industry will continue to lure dealmakers, with CAPA India indicating that IndiGo is also exploring its own order for 500 airplanes.
