India reached a milestone at the end of last year when it overtook China as the world’s most populous nation. But that explosive growth is hardly reflected in the size of its commercial aviation fleet.
Today the entire country has only about 700 aircraft -fewer than United Airlines Holdings Inc. alone – and just 50 widebody jets to transport its increasingly mobile 1.41 billion people.
Chinese carriers, by contrast, operate about 480 twin-aisle aircraft, and Emirates, whose base in Dubai has a fraction of the population of Mumbai, boasts a widebody fleet of 260 jetliners, according to figures from Cirium, which aggregates aviation data.
Now, Air India is making an expensive push to renew its fleet and expand its global presence. One year after conglomerate Tata Group bought the airline from the government for $2.2 billion, Air India on Feb. 14 announced an order of 470 aircraft, potentially marking the biggest deal in commercial aviation history with a list price value likely exceeding $60 billion.
The global importance of the purchase was underscored by the three heads of state who participated in the announcement: Prime Minister Narendra Modi, US President Joe Biden, and French President Emmanuel Macron.
The order is split about evenly between arch-rivals Airbus SE and Boeing Co., including roughly 400 of the popular A320- and 737-family narrowbody jets and about 70 widebodies, plus options for more from either company.
The new aircraft are meant to give Air India a fighting chance at competing with local budget carriers such as IndiGo as well as long-haul champions Emirates, Etihad Airways, and Qatar Airways, which have built huge operations over the past two decades funnelling millions of passengers through their Persian Gulf hubs.
Air India, after decades of languishing under government control, may look like a latecomer to a market carved up by foreign airlines, but the former flag carrier offers a key advantage: time-saving travel, thanks to direct routes to and from an increasingly important destination.
The airline operates nonstop flights to the US and Europe without having to transit in the Middle East. It also commands coveted slots at key airports, including New York’s John F. Kennedy and London Heathrow.
A direct flight from Mumbai to New York takes as little as 16 hours, compared with 20 hours to the same destination via Dubai.
Air India’s nonstop service to San Francisco is almost half as long as the other available options, according to a search on the flight-tracking app Skyscanner.
“The ability to fly nonstop to and from India gives Air India a sustainable competitive advantage against Gulf airlines,” says Shashank Nigam, chief executive officer of airline brand-strategy firm SimpliFlying.
Although the government has ceded control of Air India to Tata, supporting a strong local carrier remains a priority for the government of the world’s fastest-growing aviation market.
Seeking to make India a world-class connecting hub as well as a destination for tourists and business, the government is encouraging airlines to increase long-haul fleets while it doubles down on airport expansion.
In Mumbai, India’s financial capital, a second airport is set to open next year, potentially handling 60 million passengers annually, while Delhi will also see an addition, with a final capacity of 70 million travellers. Announcing his portion of the deal on Feb. 14, Airbus CEO Guillaume Faury said “the time is right for India to turn into an international hub.”
Besides Tata, the airline has another powerful ally in Singapore Airlines Ltd., which is investing $250 million for a 25% stake in the enlarged group that will bundle together Air India and three others, including Vistara, an Indian full-service carrier that Tata and Singapore started in 2015.
The companies’ experience and pedigree will help Air India forge lucrative code-shares and alliances, crucial to expanding an international network at a manageable cost, says Rohit Tomar, managing partner at Caladrius Aero Consulting.
Air India’s biggest challenge may be repairing its battered reputation. Created as the country’s first airline in 1932 by aviation pioneer and former Tata Chairman J.R.D. Tata, the carrier was long famed for high-class service and attention to detail that included onboard ashtrays designed by surrealist Salvador Dali, vintage Champagne service, and commercials featuring Bollywood actresses. It was the first Asian carrier to operate jets, in 1960.
But the airline was nationalized in 1953, and years of mismanagement and poor on-time performance under state control have dented Air India’s image. Instead, no-frills airlines have taken over large swaths of its domestic business, and Gulf carriers have chipped away at its overseas operations. The debt-laden carrier hasn’t turned a profit in 16 years, kept afloat with taxpayer-funded bailouts.
“Air India has been the villain of the story for so long that it’s going to take time for people to accept it as sort of a new hero,” Tomar says. “When you’re trying to make such a large change in the way people perceive you as a brand, you get only one shot.”
The revived carrier will face stiff competition on short-haul routes. Budget airline IndiGo’s fleet of about 300 Airbus A320 jets has given it control over more than half the local market. Upstarts such as Akasa Air are also pushing into the segment, creating an increasingly crowded field.
Even before the huge order, Tata Chairman Natarajan Chandrasekaran had embarked on a major transformation of Air India, from new uniforms for cabin crew to the latest seats and in-flight entertainment on existing aircraft. In total, Air India is investing more than $400 million to refurbish the interiors of its entire widebody fleet.
All those efforts notwithstanding, the carrier known for its Maharajah mascot still has some ways to go to reposition itself as a progressive brand rather than one that’s holding on to its heritage, says SimpliFlying’s Nigam.
Gone are the days when people would fly Air India just because of national pride, he says. “While turning around Air India is difficult, if there’s one firm that can do it, it’s Tata,” Mr Nigam says.
