Air India makes the biggest jet purchase in history

Air India has been soaring the skies since 1932, although it's seen financial troubles in recent years.

Air India makes the biggest jet purchase in history
A bird flies over a logo of Air India airlines at the corporate headquarters in Mumbai, India, October 19, 2021. REUTERS/Francis Mascarenhas

The backstory: Air India has been soaring the skies since 1932, although it's seen financial troubles in recent years. But now it's taking off in a big way. Tata Group bought the debt-laden airline in 2021 and has been working on updating its fleet with a five-year plan. Since Indian travelers often fly with Middle Eastern carriers like Emirates, Qatar Airways and Etihad for international trips, Air India wants to win back some of that business.

More recently: The aircraft manufacturing giants Boeing and Airbus also have their sights set on India, where they predicted a need for over 2,000 new planes in the next 20 years.

The development: Air India just made the biggest commercial aviation purchase in history by ordering 470 planes from both Boeing and Airbus. Boeing valued its purchase at around US$34 billion. Airbus doesn't publish list prices anymore, but, if we go off the company's 2018 list prices, the purchase would rake in around US$38 billion. The historical deal includes 250 Airbus and 220 Boeing planes, which will also put India on the map as a hub for maintenance and repair operations for the region.

The order is a huge step for Air India in establishing itself as a major player in the industry, and it's set to create more jobs in Wales, where Airbus already has invested over £100 million (US$120 million) and added over 450 jobs to its wing assembly plant.

Even US President Joe Biden took notice, among other global leaders, calling the agreement "historic" and discussing it with Indian Prime Minister Narendra Modi. Naturally, shares of both Boeing and Airbus boosted after the announcement.

Key comments:

"This important deal shows, along with the deepening of relations between India and France, the successes and aspirations of the civil aviation sector in India," said Indian Prime Minister Narendra Mod during a video with French President Emmanuel Macron. "This achievement shows that Airbus and all its French partners are fully dedicated to develop new areas of dedication with India."

"India is also sending a strong political signal that it wants to remain attached to the West at a time when it has appeared ambiguous on Russian sanctions," said Bertrand Grabowski, a former banker experienced in international deals.

"These orders directly synergise Air India's fleet with Lufthansa and Singapore Airlines – all part of Star Alliance, the world's largest global airline alliance," said Mark Martin, an aviation analyst. "To me it looks like a big game plan to counter the dominance of Gulf carriers, for whom Star Alliance has been an arch nemesis."