With option to buy 370 more planes, Air India’s mega 470-aircraft order could end up even bigger at 840

The current 470-aircraft order is the largest placed by an airline in one go anywhere in the world, beating the 2011 order by American Airlines for a combined 460 aircraft. The biggest order by an Indian carrier before this was IndiGo’s 300-aircraft order in 2019.

“The order comprises 470 firm aircraft, 370 options and purchase rights to be procured from Airbus and Boeing over the next decade. The Airbus firm order comprises 210 A-320/321 Neo/XLR and 40 A350-900/1000. The Boeing firm order comprises 190 737-Max, 20 787s and 10 777s. We have also signed up for long term maintenance of the engines with CFM International (CFM), Rolls-Royce and GE Aerospace,” Aggarwal said via a post on LinkedIn.

A firm order refers to the number of aircraft the buyer has committed to acquiring. Usually, firm orders are accompanied by options, which allow the airline to purchase additional planes in the future at an agreed price and date. Unlike firm orders, options are not binding on the buyer.

When the twin orders were announced on February 14, Boeing had mentioned that Air India has the option to buy an additional 70 aircraft, in addition to the 220 that are part of the firm order. At the time, there was no clarity on whether there was an option along with the firm order for 250 Airbus aircraft as well.

“In addition to the 470 aircraft on firm order, Air India has secured a number of options and purchase rights. These give us the option, but not the obligation, to take additional aircraft at already-negotiated production slots and/or prices so that we can nimbly accommodate further growth and manage risk,” Air India CEO Campbell Wilson had said in an internal communication to employees.

Together, Air India and Air India Express have a fleet of around 140 planes, with the majority being narrowbody aircraft. For domestic operations at present, Air India largely depends on Airbus planes, while its widebody fleet is made up of Boeing aircraft. Air India Express operates only Boeing narrowbody planes.

Erstwhile Indian Airlines and Air India had last placed an aircraft order for 111 planes that included single-aisle Airbus aircraft and twin-aisle Boeing planes over 17 years ago. The two government-owned airlines of the time were later merged together under the Air India brand.

Ever since Air India returned to the Tata Group a little over a year ago, the new owners have been focussed on sprucing up the product offering, while also planning an extensive expansion for the airline. A five-year roadmap–Vihaan.AI–was prepared with the objective of substantially growing the airline’s network and fleet in a bid to put it on a “path to sustained growth, profitability, and market leadership”.

The twin orders are a key element in that strategy. Air India is also in the process of refurbishing its existing planes and trying to get a few grounded ones back in the air. It is also leasing planes to expand its network and offering till the time the newly ordered planes are inducted into the fleet.

“The first aircraft to arrive will be 25 brand-new Boeing B737-800s and 6 Airbus A350-900s in the second half of 2023, with deliveries really ramping up in 2025 and beyond. In the meantime, our capacity growth will continue to be supported by the previously announced lease-in of additional narrowbody and widebody aircraft and the restoration-to-service of the remainder of our grounded fleet,” Wilson had told employees.