Finally, it's Boeing


IIf the union cabinet approves Air India's decision to award a $6 billion contract to US-based aircraft maker Boeing, it could be the strongest message yet to the Americans that India now has the economic leverage to become a global player

What is India News Service
27 April  2005

Air India will finally expand its fleet. After dilly dallying for 10 years on which aircraft to buy, India’s national flag carrier has now settled on Boeing, and agreed to buy 20 aircraft in the first phase. Press reports suggest the total order would be 50 planes.

For US-based Boeing, the order is a big victory over French competitor Airbus. India, the second-most populous nation, has more than 20 million expatriates and Boeing estimates two-way travel in and out of India will grow by 6.3 percent annually until 2021.

Air India is negotiating with banks to finance the purchase. On Monday, the Civil Aviation Minister, Praful Patel, said the Cabinet would rely on the judgment of the Air India board on which aircraft to buy. "The board is independent to take the decision and we are in no way involved in it as it is a techno-economic decision."

Private airlines such as Jet Airways, Sahara and Deccan are planning fleet expansion as the country's aviation sector is poised to take off after the Government allowed them to fly on international routes.

This would, probably, be the biggest corporate victory for the US in India. Air-India’s mega order is sure to please US-based aircraft-maker Boeing. Together with its low-cost start-up A-I Express — which has already selected Boeing for its comparatively smaller $1-billion order for 18 planes, this would make the biggest order bagged by any single aircraft manufacturer in recent times.

If the union cabinet clears the order, it will be the strongest message yet to the US that India is willing to play hard for great power stakes. Washington’s recent avowals to enable India become a great power in the 21st century have strong economic underpinnings, and for the first time, India is in a position to leverage its economic clout for strategic ends.

Just as the F-16 deal would enhance India’s larger strategic goals with the US, the civilian aircraft order would be a strong political statement.

Jitendra Bhargava, Director, Public Relations and Human Resource Development, Air-India, said: "Air-India is very keen to expand and we had several aircraft on lease earlier. The acquisition plan is of great significance to us because we cannot delay our expansion plans any longer."

The other piece of good news for Air India is that its board has accorded an in-principle approval for it to make an Initial Public Offering (IPO), subject to government approval.
 
Both the U.S. and French Governments had been pitching in for the bid with the Indian government as the deal was considered crucial, especially after Indian Airlines, India’s domestic airline, opted for a mixed fleet of 43 Airbus aircraft, which is awaiting the approval of the Union Cabinet.

This Indian order for its new, fuel-efficient 787, the deal is worth about $6 (Rs. 30,000 crore) billion at list prices, though airlines typically receive discounts of at least 30 per cent.

Air India’s high-powered committee has chosen a mix of eight Boeing 737-200LR (long range), 15 Boeing 777-300ER and 27 Boeing 7E7-8 planes. The total acquisition would cost a whopping Rs 51,637.29 crore — which is over three times the order size of sister carrier Indian Airlines.

The deal, coming a day after another $6 billion order from Air Canada, including 14 787s, underscored how Boeing's new jet is fast outstripping Airbus' competing A350 in orders.