Air India Makes Prepayment On Historic Aircraft Order

As per an internal staff communication on the airline, the Director of Finance of Air India, Vinod Hejmadi, has confirmed that the airline has made the pre-delivery payments for its record order with Boeing, which it made earlier this yr, comprising 220 jets. Reports suggest that pre-delivery payments can amount to as much as 30% of the worth of the aircraft.

The order

Earlier this yr, on February 14th, Air India announced details of its historic order of 470 jets split between Airbus and Boeing. The Boeing order consists of 220 jets which include 190 narrowbody aircraft and 30 widebody aircraft.

The airline placed orders for 190 Boeing 737 MAX aircraft on the narrowbody side. On the widebody side, the airline ordered 20 Boeing 787s aircraft, of which the airline is already an operator, and 10 of the newest generation Boeing 777X aircraft, making Air India the eleventh customer of the kind.

The list price of the 220 Boeing aircraft ordered is valued at $34 billion. Nevertheless, considering the undeniable fact that the airline has placed additional options for 50 737 MAX aircraft and 20 787s, all the value of the order on Boeing’s side comes as much as a staggering $45.9 billion.

Photo: Boeing

The order for 190 737 MAX includes the MAX 8 and the MAX 10 models, that are expected to be operated by the Air India group’s low-cost subsidiary Air India Express because the airline exclusively operates the kind.

The Boeing widebodies ordered can easily be integrated into the airline’s fleet because it is already an operator of the 787s and the Boeing 777s. The incoming 787s and the 777X will replace a number of the aging aircraft and concurrently enable the airline to expand its long-haul route network and compete with Middle Eastern carriers by enabling its passengers to achieve more destinations across North America and Europe, using direct flights.

Benefits for Boeing and america

While such a large order is a big win for the manufacturer, it also positively affects the US economy and strengthens the US-India partnership. The American President, Joe Biden, released a press release explaining the advantages of the order on the day it was announced,

“This purchase will support over a million American jobs across 44 states, and lots of won’t require a four-year college degree. This announcement also reflects the strength of the U.S.-Indian economic partnership.”

Photo: Vidit Luthra | Shutterstock

Moreover, this order shows a vote of confidence on a big scale for 2 of Boeing’s most significant aircraft for the longer term. The Boeing 737 MAX 10 and the 777X aircraft are yet to be certified and have previously been affected by significant delays. Nevertheless, with each types having received major orders from multiple carriers, this might induce confidence in other airlines trying to place orders for each narrowbody and widebody aircraft.

A possible final result

Ever since being acquired by the TATA group in India, the airline has had a fast turnaround in acquiring more aircraft and getting grounded aircraft back within the air because the carrier expands. The expansion of Air India and future developments could potentially cause significant changes in how passengers inside India and, to a certain extent, even Asia travel to cities inside Europe and North America.

Photo: BoeingMan777 | Shutterstock

Though, in the mean time, most passengers transit via the most important Middle East hubs, because India is one in all the most important aviation markets and the Air India group is ready to receive lots of of aircraft, it is kind of possible to see passengers preferring to fly Air India or transit in one in all the airline’s hubs in India.